Plain-English definitions for the terms you'll encounter on your financial journey.
A set of international banking regulations that provide standards for capital adequacy, stress testing, and market liquidity risk.
A strategy of buying multiple certificates of deposit with different maturity dates to maintain liquidity and capture varying interest rates.
A liquidity ratio that measures a company's ability to pay short-term obligations due within one year.
The ease with which an asset or security can be converted into ready cash without affecting its market price.
A collection of funds locked in a smart contract that provides the necessary capital for decentralized trading and lending.
The risk that an investor will not be able to sell an asset quickly enough to prevent a loss or meet financial obligations.
A situation in which interest rates are so low that people prefer to hold cash rather than invest or spend. This makes traditional monetary policy tools ineffective at stimulating the economy.
A financial firm that stands ready to buy or sell a security at all times to provide liquidity to the market.
The process by which a central bank reduces the size of its balance sheet by selling assets or letting them mature. It is intended to decrease the amount of liquidity in the financial system.
A monetary policy used by central banks to decrease the amount of liquidity or money supply in the economy.
An indicator of a company’s liquidity that measures its ability to meet short-term obligations with very liquid assets.
An international reserve asset created by the IMF to provide liquidity and supplement the official reserves of member countries.
A macroeconomic problem that occurs when the short-term nominal interest rate is at or near zero, causing a liquidity trap.