Banks in the 21st century play a crucial role in providing both funding liquidity (cash on demand) and market liquidity (low-cost asset trading). While traditional banks relied on deposits to fund loans, modern banks use lines of credit and loan commitments for funding liquidity. They also contribute to market liquidity by trading securities, syndicating loans, and securitizing loans. Banks excel in producing funding liquidity due to their expertise in managing funding liquidity risk, supported by their balance sheet structure and access to government-guaranteed deposits and central-bank liquidity.