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What is then the difference between liquidity and solvency?
Solvency is the abstract quality of being able to use one's assets to meet one's liabilities. Solvency is in principle, assuming the book value of an asset allows it to be used in payment of the liabilities.

Liquidity is the ability to use an asset for payment of momentarily maturing liabilities, or more narrowly the ability to liquidate the asset for cash with which to pay the liabilities.

Economics is politics by other means

by Carrie (migeru at eurotrib dot com) on Fri May 20th, 2011 at 05:21:28 AM EST
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