#Liquidity101

Liquidity refers to how quickly and easily an asset can be converted into cash without significantly affecting its price. High liquidity means assets can be bought or sold rapidly, such as stocks on major exchanges. Low liquidity, often found in real estate or rare collectibles, makes transactions slower and potentially more costly. In financial markets, liquidity is vital for stability, investor confidence, and efficient pricing. Central banks and financial institutions monitor liquidity closely, especially during economic uncertainty, to ensure markets function smoothly. Overall, strong liquidity supports economic growth by enabling smoother trade, investment, and access to capital.