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According to the Encarta dictionary it either means the state of being liquid or assets that can easily be converted into cash.

So, basically when the FSA is droning on about liquidity it is talking about banks and building societies having to make sure they have enough cash in their coffers in case their customers decide to beat down their doors.

It is crystal clear why the FSA has been banging on about liquidity lately – Northern Rock. It may now be nationalised but it continues to cast a shadow over its rivals.

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