I learnt about a new idea while reading how FTX recently went bankrupt (within a short period of time).
A liquidity problem happens when a bank’s assets are tied up in long-term assets but its customers, a lot or all of them, are demanding their money right now.
The latter could happen if customers lose trust in the bank (i.e. bank run) or some other reason.
One way to solve this through a central bank which literally has the power to print money on its free will: it steps in, uses bank’s collateral to lend money and charge interest and/or penalty.
A solvency problem is when a bank, crypto exchange etc. just lost customer funds. For e.g., it invested in risky or volatile assets and those assets went bust.
Possibly no way out except filing for bankruptcy because no one would want to loan money to such a company that doesn’t have any collateral or assets.
FTX claimed it had an liquidity problem but more likely had a solvency one. It really fucked up.