What is liquidity - its pros and cons

click fraud protection

Liquidity is one of the main indicators of the state of the economy.Globally use a term such as "international currency liquidity", which is indicated by the capacity of States to implement fully its debt obligations.If the economy of a country is stable for a considerable time, and tends to rise, it is recognized solvency, which means, in turn, the high liquidity of invested funds into the economy.

Learn what liquidity can be, acquainted with the annual summary report to be prepared by the IMF.This organization continuously monitors the liquidity of world economies.

to determine the liquidity indicator of the state of the economy it should be assessed on the following criteria: officially declared by foreign exchange reserves, the availability to the public accounts of the moneys in the currency withdrawn from circulation, as well as the country's reputation in the International Monetary Fund.

With deep analysis of these factors, it is possible to accurately determine whether at this time the economy meet the requirements such as liquidity and solvency.Analytics of these indicators are usually also involved in independent and specialized agencies that continuously collects the required information and match it, creating thus an objective picture, clearly illustrating the state of the economy of each country.

As a result of the work of analysts, it was found that one of the most important components of the monetary system is the control of MVL are not in the world, and, above all, at the national level, which was a real breakthrough in the research of economists who spend time and moneythe fact to understand what is liquidity.

the definition of "liquidity" is inextricably linked, and the concept of "reserve currency".This name is either the convertible world currency in which prefer to keep their money government agencies in several countries of the world.

But not only has a circulation of currency can be a reserve.In the 1970s, the future of the Eurozone countries and the IMF released into circulation two new units of money that have been specifically designed to be redundant.At first, the decision seemed correct - many countries have taken advantage of these currencies and fully experienced what liquidity.However, it soon emerged cons innovation.Some states clumsily used the ECU and SDR (so called currency), which led to stagnation and illiquidity of their economies, resulting in both monetary systems have been successfully eliminated.

Currently learn what liquidity, and why you should take it into account, it is possible on a variety of Internet sites, the benefit of financial professionals in the world is now more than the deposits frozen in the accounts of Cypriot banks, as a result of illiquidity there the economy.