The problem of international liquidity is related to the non-availability of

Question

Question

This question was previously asked in

UPSC Civil Services Exam (Prelims) GS Paper-I (Held On: 23 Aug, 2015)

Answer 1

The correct answer is dollars and other hard currencies.

The concept of international liquidity is associated with international payments that arise out of international trade in goods and services.
International liquidity consists of all the resources that are available to the monetary authorities of countries for the purpose of meeting balance of payments deficits.
Such liquidity ranges from assets readily available to resources that become available only after extensive negotiation.
The primary medium of international liquidity are gold and those foreign currencies which are universally acceptable in the settlement of international transactions.
The problem of international liquidity exists essentially for developing countries.