Liquidity refers to the ease and speed with which an asset or security can be bought or sold in the market without significantly affecting its price. Liquidity reflects the depth of a market, the level of trading activity, and the presence of willing buyers and sellers willing to transact at prevailing market prices. Highly liquid assets can be quickly converted into cash with minimal price impact, while illiquid assets may require more time, effort, or concessions to sell at fair value. Liquidity is essential for efficient markets, price discovery, and investor confidence, allowing participants to enter or exit positions, manage risks, and allocate capital effectively. Common measures of liquidity include trading volume, bid-ask spreads, market depth, and turnover ratios, providing insights into market liquidity conditions and trading dynamics. Central banks and regulators monitor liquidity in financial markets to maintain stability, prevent disruptions, and safeguard investor interests, implementing measures to enhance liquidity provision, transparency, and market functioning during periods of stress or crisis.