Fungible

Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution (i.e. interchangeability). That is, it is the property of essences or goods which are "capable of being substituted in place of one another." For example, since one ounce of pure gold is equivalent to any other ounce of pure gold (whether in coins, ingots or other forms), gold is fungible. Other fungible commodities include sweet crude oil, company shares, bonds, other precious metals, and currencies. Fungibility refers only to the equivalence of each unit of a commodity with other units of the same commodity. Fungibility does not relate to the exchange of one commodity for another different commodity.

The word comes from Latin fungibilis from fungī, meaning "to perform", related to "function" and "defunct".

Fungibility is different from liquidity. A good is liquid if it can be easily exchanged for money or another different good. A good is fungible if one unit of the good is substantially equivalent to another unit of the same good of the same quality at the same time and place.

Examples:

Fungibility does not imply liquidity, and vice versa. Diamonds can be readily bought and sold, as the trade is liquid, but individual diamonds, being unique, are not interchangeable. Therefore, diamonds are not fungible. Indian rupee bank notes are mutually interchangeable in London (they are fungible there), but they are not easily traded there because they cannot be spent in London except at currency exchange services. In contrast to diamonds, gold coins of the same grade and weight are fungible as well as liquid.

In legal disputes, when one party is compelled to remedy another party as the result of a ruling or adjudication, the appropriate legal remedy may depend on the fungibility of the underlying right, obligation or property interest that is intended to be restored. Depending on whether the interests of the aggrieved party are fungible, a determination made by the trier of fact, the appropriate remedy may change. For example, a court may require specific performance (an equitable remedy) as a remedy for breach of contract, instead of the more favored remedy of monetary damages.

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Wikipedia