This report investigates the issue and presents new evidence, particularly focusing on the supply of liquidity services by market-makers. To obtain this information the European Systemic Risk Board (ESRB) conducted a quantitative data collection exercise as well as a qualitative survey with the largest market-makers operating in Europe. The data gathered show mixed evidence of developments in market liquidity. For asset classes other than corporate bonds, gross and net inventories have either increased or remained unchanged. However, for European corporate bond markets, gross and net inventories have declined since 2010, possibly indicating a reduced ability or willingness of market-makers to act as intermediaries in these markets. Moreover, compared with the growth in outstanding amounts of corporate bonds, market-makers’ inventories have decreased even more. The findings from the ESRB’s data collection are consistent with market-based measures of liquidity. Liquidity resilience, i.e. the existence of liquid markets during times of stress, is important for financial stability. The financial crisis has shown that, at normal times, liquidity conditions may be perceived to be ample, but a sudden lack of liquidity can occur during times of stress. Any possible deterioration in the supply of market liquidity as indicated by the results presented in this report has occurred against a backdrop of increasing demand for liquidity. Demand has increased owing to the expansion in market-based finance and an increase in bond holdings by asset managers. […]