liquidity

American  

[li-kwid-i-tee] / lɪˈkwɪd ɪ ti /

noun

1. a liquid state or quality.

2. the ability or ease with which assets can be converted into cash.

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liquidity British  

/ lɪˈkwɪdɪtɪ /

noun

1. the possession of sufficient liquid assets to discharge current liabilities

2. the state or quality of being liquid

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liquidity Cultural  

1. The condition of having enough money on hand to meet financial obligations without having to sell fixed assets, such as machinery or equipment.

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Etymology

Origin of liquidity

From the Latin word liquiditās, dating back to 1610–20. See liquid, -ity

Explanation

Liquidity refers to a state where something is in liquid form, like water. It can also refer to having cash or access to cash. Liquidity means things are flowing. Although liquidity refers to…surprise! being a liquid, it’s usually used in a financial sense. Financially, liquidity refers to having access to cash or things you can sell and turn into cash. In other words, you have good cash flow. Liquidity can also apply to any situation that is marked by fluidity or runniness. You hope your new swimming pool is in a state of liquidity, and that you have enough financial liquidity to pay for it!

Example Sentences

The Ministry of Finance will also hold a liquidity enhancement auction of about 250 billion yen in 20-, 30- and 40-year JGBs Tuesday.

From The Wall Street Journal • Apr. 17, 2026

So the argument is not so much about risk per se as it is about liquidity versus higher income.

From MarketWatch • Apr. 15, 2026

Although uncertainty and volatility have been high, investors haven’t yet exited markets altogether, avoiding the liquidity stress that can lead to a downturn.

From Barron's • Apr. 14, 2026

Capital concentrates where liquidity is deepest and legal protections are strongest.

From The Wall Street Journal • Apr. 14, 2026

When an executive said his bank had plenty of liquidity it always meant that it didn’t.

From "The Big Short" by Michael Lewis