What Does Fungible Mean?


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Rajesh Shri Profile
Rajesh Shri answered
Fungible means fully exchangeable either entirely or even in bits and pieces. However it does not always mean liquidity. Sometimes it does though. For example gold and silver are liquid as well as fungible. Gold and silver can be traded easily whether it is pure gold bar or a gold coin. Gold items can be exchanged for money almost in any market. However, something like a precious stone is not fungible. These have lower liquidity and the trade price is highly dependent on the demand and choice of the buyer. The same atone can get two different prices at two different parts of the world. Fungibility and liquidity may or may not always have a relationship. For example Oxygen is fungible for not liquid. The property of the substance determines its fungibility where how easily it can be traded determines its liquidity

Fungibility can also be extended to Financial and international relations, as well as in matters of law and science.

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