Fungibility

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What is 'Fungibility'

Fungibility is a good or asset's interchangeability with other individual goods/assets of the same type. Assets possessing this property simplify the exchange/trade process, as interchangeability assumes that everyone values all goods of that class as the same.

BREAKING DOWN 'Fungibility'

Many diverse types of assets are considered to be fungible. For example, specific grades of commodities, such as No.2 yellow corn, are fungible because it does not matter where the corn was grown - all corn designated as No.2 yellow corn is worth the same amount.

Cross-listed stocks are considered fungible as well because it doesn't matter if you purchased a share of XYZ stock in its home country or in a foreign country; it should be accepted at either location as XYZ stock.

 

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