How easily an asset can be bought or sold quickly without moving its price much.
Liquidity describes how easily something can be converted to cash without a big discount. Cash itself is perfectly liquid. A share in a large, heavily traded company is highly liquid, you can sell it in seconds near its current price. A house, or a stake in a small private company, is illiquid, it can take months to sell and might require a price cut to move quickly. "A liquidity crunch" means cash and easily-sellable assets have suddenly gotten scarce across the system, which is often when financial stress turns into a genuine crisis.
Part of the Open Bell Glossary — plain-English explanations of the terms that come up on the show. Browse every term.