fungible

I heard this word on some financial news the other night, and realized that it's come up a time or two before in similar contexts. If you're like me, there are certain words that catalyze a kind of brain crash, and for me 'fungible' is one of them. It's partly because the world of finance is opaque to me in the first place, but partly because no matter how much I glean from context, 'fungible' immediately makes me think of fungus and also of sponge, so 'fungible' just sounds like something squishy in a kind of odious way. I had to try to find the word in context even to begin talking about it and so already know that it has to do with the liquidity of assets, which in this context (ooh, yuck!) doesn't really help matters.

So what does fungible really mean? What's its derivation? And why, oh why does it have to keep reminding me of a giant fungus plotting to take over the world?

Okay, at root, fungible really means 'interchangeable'. (Fungus, by the way, probably comes for the Attic Greek version of spongos, which is sphongos and means sponge. See?)  It helps to understand that it is related to function, not fungus. It comes from the Latin fungor--to execute, to perform, to discharge a duty, and -ible, which signifies the ability to do so. It actually comes down to us from the Latin through law, not finance, and the idea is, what is equivalent to what is owed, or, more simply, what exactly will make this right?

There's a good definition that helps our understanding of the way the word is used in different contexts at WordIQ. Fungibility is the degree to which items are equal. The example used there is that a gram of gold is recognized as substitutable for any other gram of gold, while a bale of wool is not a pure measure in the same way, as wool varies in quality, color, etc.

It's interesting to think about the most fungible assets as the ones being in some crucial way most uniform. You can trade a barrel of crude oil for another barrel of crude oil without blinking--okay, that was probably an unfortunate example--but when it comes to a barrel of apples, we might be arguing all day about whether my barrel of apples is sweeter than yours or vice versa.