#Liquidity101

Liquidity is the ability to quickly buy or sell an asset in the market without significantly changing its price. In finance, high liquidity means that assets like stocks, bonds, or cash can be traded easily at low cost. Liquidity is important because it ensures the market functions smoothly, reducing risk for investors. A market lacking liquidity can lead to large price fluctuations and difficulties in trading. Central banks often adjust liquidity through monetary policy to stabilize the economy and support sustainable growth.