#Liquidity101

Liquidity refers to how easily assets can be converted into cash without affecting their market price. High liquidity means assets can be quickly sold with minimal loss in value—like cash, stocks, or government bonds. Low liquidity assets, such as real estate or collectibles, may take longer to sell and may require discounts. Liquidity is essential for individuals and businesses to meet short-term obligations. In financial markets, liquidity supports smoother trading and price stability. Central banks and financial institutions monitor liquidity closely to manage risk and ensure economic stability. In essence, strong liquidity is vital for a healthy financial system.