Talk:Fungibility

Fungibility in common parlance

According to one version of the Merriam-Webster Dictionary:

Fungible :

1. A commodity that is freely interchangeable with another in satisfying an obligation

2. Something that is exchangeable or substitutable.

As such it seems like Fungible can mean Tradable in some situations.

No. The two commodities in (1) are fungible in respect only to the particular stated obligation. This is a matter for commercial contract or, if disputed, a court of law to decide. And it would be decided case by case. Paul Beardsell (talk) 01:13, 27 January 2009 (UTC)

Fungibility and food

Moved from article:

Could someone elaborate on this? Why are fungible food crops considered bad? Who thinks this way?

Well perhaps some people have good reason for thinking this way.

Removed from article:

With the advent of genetically modified organisms and increasing concerns over pesticides and other contaminants, fungible trade in food crops is now considered by many to be a Bad Thing.

This does not make sense as it is. It need elaboration. We need to know what "fungible trade in food" is. Does it mean "trade in fungible foods"? Whatever it means, someone needs to explain why it is considered a bad thing. mydogategodshat 01:53, 15 Feb 2004 (UTC)

I'd assumed they are talking about trade in fungible food such as corn, and they do not consider GM and non-GM corn to be fungible.

Missing words regarding international relations

This sentence is clearly missing a word or two: "International relations theorists who believe that power regard different types of power as reinforcing each other." What word should be inserted between "that power" and "regard different"? mikejurney Tue Apr 6 14:02:34 EDT 2004

Maybe the author was trying to say:

International relations theorists who use the term, believe that different types of power, are interchangable and can even reinforce each other. For example, if power is fungible, then a state can translate its economic power into military power, and vice versa. . . .

mydogategodshat 23:43, 6 Apr 2004 (UTC)

It's possible, but adding that wording is a fairly significant change. It reads to me like any number of mutually exclusive things could follow "power". I suppose in this case it's better to leave it misworded than it is to fill in possibly incorrect wording.

mikejurney Sun May 2 15:10:43 EDT 2004

I just came back to this, and I think mydogategodshat is, in essense, correct. The feel I get from going back over it is that the original author was trying to say that IR theorists believe that different types of power are interchangeable (as opposed to economic theorists, who state that different types of goods are interchangeable). It makes sense, and I think it's consistent.

mikejurney Tue Sep 21 21:05:20 EDT 2004

I am the original author, and this could have been done much more easily if someone had just dropped a note on my talk page. Anyway, mikejurney, you are correct in your interpretation. I originally meant to write "International relations theorists who believe that power is fungible regard different types of power as reinforcing each other" but accidentally omitted the words "is fungible". Anyway, thanks for working to make the article better. —Lowellian (talk) 23:13, Feb 23, 2005 (UTC)

Would it be better if the mention of US and India are substituted by "Country X" and "Country Y"?

Fungibility and Law

Does someone more qualified (an economist and/or lawyer) than myself feel that adding a section or comment on the use of the term in legal proceedings would be useful? Isn't it essentially the same as the first definition listed?

Done: Added a short section. dr.ef.tymac 23:27, 28 December 2006 (UTC)

Gold

Since there are different purities of gold, shouldn't the article state "gram of pure gold"?

Also a 33.431g gold ingot (90% gold, 10% copper) certainly has a different value than a gold 1933 double eagle, which coincidentally has the same weight and compositional ratios of Au and Cu. The difference is in the millions of dollars, hardly fungible.

What fungibility is

I have changed the introductory sentence to more correctly say what fungibility is. But the article still (currently) says this:

In finance, fungibility refers to the ability of one security to be easily converted into another.

No! Not true! That is the ability of a security to be traded. Fungibility is different. A bearer bond is fungible, a bank note or a coin is fungible. A share certificate is (typically) not fungible (because it has a registered owner), nor are the title deeds to a house (because once again the house has a registered owner and one house is not the same as another). However, shares (one security) are "easily converted into another" security. Tradeable, not fungible.

Bank notes are fungible BECAUSE one five pound note is easily and readily substituted by another. Paddington Bear was upset when the bank note he withdrew from his bank did not have the same marmalade stain on it as the bank note he deposited but Paddington Bear, like the authors of this article, did not understand fungibility.

Trade-ability is often improved by and/or fascilitated by fungibility but they are not the same. By definition fungibility is the ability to substitute one example of a good by another example of the SAME good. I am puzzled that an entire article can be written both without citation and without reference to a dictionary!

Paul Beardsell 09:03, 3 April 2006 (UTC)

A note from recent usage in The Atlantic monthly, May 2006, page 104, third para. by Franklin Foer. ..."the United States could simply rearrange its buying patterns—oil is a fungible commodity over anything but the very short term."

Its usage reflects a sense of oil from one source being replaceable with oil stocks from other sources. Flexibility seems to be inferred.

Oxford American {c} 2003, American ed. Oxford Univ. press, has basically a legal definition of goods that may be substituted for by goods with the same definition [when a specific specimen is not not contracted for]. Exchangibility is implied therein in their definition of fungibility as "to serve in place of".

Disputed tag

It was my intention, having written the above section on what fungibility is, to re-write the article. But I cannot find references to sociological or non-financial or non-economic fungibility and I strongly suspect it to be an invention of the wikipedia editor who contributed the material. Where fungibility is used in a non-economic sense it is used as metaphor. Simply and only. As we have no need (and it would be impossible) to have all metaphorical uses of all English terms detailed - we are smart enough to understand metaphor - I propose to just delete all that material leaving a plain old definition as a stub. What say you? Paul Beardsell 14:17, 3 April 2006 (UTC)

--Read Saidya Hartman's Scenes of Subjection for uses of fungibility in a sociological sense. especially relating to slavery. -- --Aimeezyg 15:00, 9 September 2006 (UTC)

To avoid confusion in future, some references could include:

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott: fungible: Of or relating to assets that are identical in quality and are interchangeable. Commodities, options, and securities are fungible assets. For example, an investor's shares of Xerox left in custody at a brokerage firm are freely mixed with other customers' Xerox shares. Likewise, stock options are freely interchangeable among investors, and wheat stored in a grain elevator is not specifically identified as to its ownership.

Merriam-Webster's Dictionary of Law: fungible: being something (as money or a commodity) one part or quantity of which can be substituted for another of equal value in paying a debt or settling an account (oil, wheat, and lumber are fungible commodities)

--Safalra 14:49, 3 April 2006 (UTC)

That's very helpful. The second definition is a little loosely worded allowing, on a non-careful reading, the interpretation made in the article. I.e. fungible means exchangeable for another commodity. No! I emphasise - and both definitions agree with me - exchangeable for another quantity of the same commodity/security. Paul Beardsell 14:59, 3 April 2006 (UTC)

---

I agree that Paul's raised a point worthy of puzzling out. I agree that the page is troubled, but not as troubled as his critique suggests. The root of the problem would seem to be that fungible is not the same as fungiblity. The addition of ity creates a word that is inherently about the metaphor that fungible suggests.

I disagree: fungible is to fungibility what culpable is to culpability. The first is the adjective and the second is the noun. Nothing more, nothing less. Paul Beardsell 06:01, 10 April 2006 (UTC)

I not willing to agree that the sentence "Larry is culpable." is identical to the the phrase "Larry has culpability." The first is far more absolute than the second which only brings into play a discussion of exactly how culpable. Bhyde 02:16, 11 April 2006 (UTC)

The sentences are not identical literally. But they are identical in meaning or oh-so-similar in meaning that you would be hard pressed to find two English teachers who would agree how they are different. You "absolute" point is arguable: Joe can be a little culpable or his culpability can be absolute. Jane can be absolutely culpable or her culpability can be in degree only. My point stands: Fungibility is to fungible as culpabilty is to culpable and as xxxxity is to xxxx. I was arguing against the notion that there is something fundamentally different in meaning between something being fungible and that something has fungibility. It seems to me that a difference is being vainly sought to support the incorrect notion that fungibility implies tradeability. It does not. More below. Paul Beardsell 07:42, 11 April 2006 (UTC)

I found this useful: http://www.wordreference.com/definition/fungibility is helping me to be confident of my current position.

It looks like the word arose in the legal context. If you borrowed a cup of white sugar and then cleared the debt with a cup of powered sugar the resulting dispute as "are those two commodities fungible." In this sense it is also used to cover a multitude of situations where a debt, contract, etc. is finally cleared. The negotiation/disputes in those situations are about the exchangablity of the item(s) offered up to clear the contract for what was actually mentioned in the contract.

It should be noted that the very common phrase "money is fungible" certainly seems to me to be pushing the adjective's meaning to get at the role that money plays in exchange; rather than it's role as a substitute for another peice of money. Possibly that's a metaphor that's taken on a life of it's own :-).

You beg the question! Money is tradeable by definition. That money is also fungible we agree on. Your argument is that this is because money is tradeable. No! Circular argument! Money is tradeable because it is money! Fungibility does not necessarily imply tradeability and t...ity does not necessarily imply f...ity. Paul Beardsell 07:53, 11 April 2006 (UTC)

Well, no: Only if you think fungibility has something to do with exchanging one thing for a different thing would you have this opinion. That is tradeability not fungibility. Paul Beardsell 06:01, 10 April 2006 (UTC)

I hear you, but for most people there just isn't that much difference between the choice of what items are used to finish clearing a debt and the items that are acceptable in trade. I think people often use the word fungible to describe both a commodity that is easily used to clear a debt and to describe something that's easily tradable. Yes in it's most technical meanings it is used to tease out if a a bushel of winter wheat is an acceptable substitute for a bushel of more generic wheat. American heritage: "Returnable or negotiable in kind or by substitution" is an example of a definition that is getting at the broader meaning.

That many are wrong, sometimes or often, should not surprise us. The choice which you say many are unconcerned about is the choice between a fungible item and a tradeable one in certain circumstances. If you want to make the point in the article that often fungibility and tradeability are concepts which are confused by many I will be happy about that. But I note that the special relativity article does not document the many wrong headed notions about that subject nor does it list what the wrong headed notions are! The point of an encyclopedia is to be a source of reference and to educate. When someone is interested in what fungibility really is comes here then they should get the correct answer. Correctness is not a popularity contest. Your so-called "broader" meaning I say is incorrect. Provide references to support your view or give way. Paul Beardsell 07:42, 11 April 2006 (UTC)

Fungibility is a loser concept. Powered suger may not be fungible with granulated sugar, but it does have fungiblity with granulated sugar. I.e. something has fungiblity is it is likely to be accepted with minimal negotiation and conflict when you offer it up to close out a contract or when you use it in trade. Money has so much fungiblity, i.e. it is very likely to be an acceptible substitute even for a cup of sugar, that it's common to due away with the ity and declare it be fungible.

I disagree again and again. Last issue first: No, that's just a standard way of making a noun out of an adjective - it's just English. If there is the quality xxxxxxx which an object has then it has xxxxxxxity. That many things are readily tradeable for money does NOT make the money fungible. Fungibility is the quality a commodity has when one example of it can be readily exchanged for another example of the SAME commodity. Not a DIFFERENT commodity - that's tradeability. Coins are both fungible and tradeable. That does not mean they are the same. Nor does it mean that one property is a subset of the other. Coins are also round but roundness (the noun derived from round) is neither a looser not tighter concept than tradeabilty. They are DIFFERENT concepts. As are tradeabilty and fungibility. Paul Beardsell 06:01, 10 April 2006 (UTC)

Tradeable v.s. fungiblity is a fine and worthy distinction. Ought to be brought out in the definition. I agree also that they are distinct qualities, though I would argue that they have a swath of overlap. But I think your fighting against common usage to insist that fungible is not oft used to mean easily tradable. When people say a problem with foreign aid is that the funds are fungible they are talking about how the funds will be spent - i.e. traded. When people talk about how the introduction of genetically engineered grains bring into question the definition of what is grains should be treated as fungible they are talking about a quality of the commodity. Bhyde 02:16, 11 April 2006 (UTC)

No! The reason the word fungible applies here is this: A state is given aid to feed the poor. That state also collects taxes and duties. The state also sells bonds. All the money goes into the state coffers. The state then buys munitions. What money did they use to buy the guns? What is the quality of money that prevents us from telling? It would be useful to have a shorthand term for this concept. So useful that a term need not be invented as it already exists: The word is fungible. If we had not given aid perhaps the guns would not have been bought. If we had not given aid perhaps the food would not have been bought. That's a problem with foreign aid: We cannot tell. Fungibility. Not tradeability. Paul Beardsell 07:42, 11 April 2006 (UTC)

Again and again and again and again: That is what the word means: That one quantity of a commodity can be substituted indistinguishably by a like quantity of the SAME substance. Fungibility. Paul Beardsell 07:42, 11 April 2006 (UTC)

All that said another significant revision is called for. Bhyde 12:22, 7 April 2006 (UTC)

Now we agree. Paul Beardsell 06:01, 10 April 2006 (UTC)

Ah, humor. "She forgets she borrowed butter Any pays you back in cream!" Bhyde 02:16, 11 April 2006 (UTC)

I think that a reference to another money-like substance - diamond - might clear up some confusion. Diamonds are generally desirable, and like coin or paper money, will in many cases suffice to clear up debts. Diamonds are thus tradeable. However, whilst I might accept any $2 coin for any other $2 coin (supposing I'm sure it's genuine and not counterfeit), I would not be so likely to accept any diamond as exchange for any other diamond, even if I know it's diamond (and not cubic zirconia), and even if I know the two have the same carat weight and cut, and hence appear to be the same. The second diamond may not have the same clarity or colour, and thus not be worth as much as the first. Similarly, two half-carat diamonds are worth less than a one carat diamond, whereas with fungible substances, two equal weights or measures should be worth a single measure of twice as much. You might accept a half-bushel of wheat today, and another half tomorrow as payment for the bushel you loaned last week; you won't accept two half-carat diamonds for a single carat solitaire. Thus, diamonds, while tradeable and valuable, are not fungible.

In marketing, fungibility refers to substances that are undifferentiated in the consumer's mind. For example, gas from Exxon or from BP are fungible quantities; you will accept five gallons of BP gas for five gallons of Exxon gas. Many advertising dollars are spent each year trying to convince consumers that certain goods are not fungible, the most ludicrous of which are dollars spent convincing consumers that bottled water (e.g. Dasjani) is superior or different than bottled water (e.g. Poland Springs, Aquafina, etc. etc. ad nauseum). Note that this is *NOT* the same as substitution goods - e.g. butter and margarine. When, e.g., the price of butter rises, people will substitute margarine for it, but that does not mean the goods are fungible. If I lend you a pound of butter, and you give me back a pound of margarine, I'm not going to be happy! I think this use of the term fungible, while similar to the economic sense, is distinct enough to warrant its own discussion.

Overall, I wholly agree with Paul; the original article is quite simply wrong and must be revised. KevinBear 20:06, 18 April 2006 (UTC)

I will therefore replace the article with a plain old simple definition, contrast fungibility with tradeability using perhaps the above diamond example (tradeable does not imple fungible), mention that yen are fungible in Cape Town but not tradeable for goods in Cape Town (fungible does not imply tradeable). And add a stub tag. Comment? Paul Beardsell 22:17, 19 April 2006 (UTC)

I have made several edits, to try to clear up the fungibilty versus liquidity thing. nirvana2013 07:52, 1 May 2006 (UTC)

Regarding lack of citations, I found two citations I believe are worth including on the sub-topic of Fungibility and International Relations. Based on my graduate school studies, I believe these are two prominent sources of the debate on fungibility of power in international relations. Sorry I don't have time to format them at the moment - here they are:

David A Baldwin, "Power Analysis and World Politics: New Trends versus Old Tendencies." World Politics, 1979. Princeton University Press.

Joseph S. Nye, Jr. "Soft Power." Foreign Policy, 1990.

Seeing as there has been no furthur discussion, and that the article seems (to me) to display a clear and unambiguous presentation of the meaning of fungibility (or perhaps fungibleness), I have removed the disputed tag.Dudecon 22:50, 4 April 2007 (UTC)

fungibility & hypothecation

Several sections and examples in the article are about hypothecation (i.e. the allocation of funds) rather than fungibility. I dispute, for example, that it is the fungibility of money that causes a problem for a parent trying to control how the child's pocket money is spent. What the parent is trying to control is the trading of the money, not the substitution by the child of his pocket money for other coinage.

Diamonds are not fungible. If Richie Rich's father gives RR his pocket money in diamonds then he still does not have control over what RR spends his pocket money on.

We have established that tradeability and fungibility are different concepts. I'm culling the pocket money example and other hypothecation and trading text in the article.

Paul Beardsell 20:13, 11 March 2007 (UTC)

Fungibility in financial relations

This section has been removed. It lacks citation but more importantly it is not about fungibility but about hypothecation. Here is the removed text:

==Fungibility in financial relations== Discussion about exchanges between parties is nearly impossible to separate from discussions about the relationships between those parties.{{fact}} Parents will often limit what their children may spend their allowance on. Employers will limit what their employees may purchase when traveling. Fungibility provides one way to discuss such examples.{{fact}} For example shop keepers are sometimes willing to sell you a gift certificate at a discount because the gift certificate must be used in that particular shop: The purchase of a gift certificate earmarks the money for one particular use: The money's fungibility is lost. ''Fungibility'' gives rise to a persistent puzzle of how to retain control after funding an activity.{{fact}} Consider the example of charitable giving. Donors would often prefer to earmark their donations for a particular purpose. That frustrates the recipents who would prefer to retain their freedom of action. Both sides can find this frustrating. The donor can be frustrated to discover the money he gave for a particular purpose wasn't spent as he desired, but yet the organization reduced its usual level of funding for that purpose shifting funds to other activities. This puzzle arises in all funding situations. For example, [[international development]], [[venture capital]], [[welfare (financial aid)|welfare payments]], and children's lunch money. Some institutions have obviated this problem by awarding contingent funding in the form of [[X PRIZE Foundation|prizes]]. <!-- This is [[hypothecation]], not fungibility, surely?!?!? -->

Paul Beardsell 20:22, 11 March 2007 (UTC)

Fungibility and open/closed systems

I have cut this section. It lacks citation and is more about hypothecation (the use and allocation of funds) rather than fungibility.

==Fungibility and open/closed systems== Beyond simple relationships fungibility can give rise to puzzles around groups. Groups may take the decision to reduce fungibility for planning purposes. For example: annual budgeting in hierarchical organizations reduces the organization's ability to move funds across the organization. A group may place tight controls on the fungiblity around their periphery. For example in a nation that provides numerous benefits for its citizens, currency controls are needed to collect the taxes that support those benefits, particularly at the nation's borders. Fungibility can make it difficult to get a clear picture of what's really going on. Consider [[medical debt]] where conversion of medical debt into a different kind of debt, such as [[credit card debt]], will mask the real amount of debt's origin from health care costs. For instance, an individual might pay for his or her emergency-room visit on a credit card, and therefore convert health care-generated debt into credit-card debt. The fungibility of medical debt is often more insidious, however. In many cases, individuals are forced to pay steep health plan deductibles as well as [[Out-of-pocket expenses|out-of-pocket]] co-payments to receive care. These high medical costs drive many people to delay paying other bills, like mortgage or utility payments, which cause them to incur debt.

Paul Beardsell 20:30, 11 March 2007 (UTC)

intro wording 20070312

A concise intro is a fine goal. I presume that is the primary motivation for the recent changes to it. There is a problem of circularity, however, with the following wording:

   Fungibility is the property a good or a commodity has when one example 
   of the good or commodity is interchangeable with another example of the 
   same good or commodity.

The problem: in this context, one can not credibly define "fungible" as an inherent property without also defining what is meant by "one example" and "same" ... this definition doesn't actually communicate any new information to someone unfamiliar with the basic concept.

For example, assume the following fanciful scenario:

• wheat is a "commodity" traditionally sold in "bushels"
• Joey the Benevolent Dictator declared wheat is "fungible" because one bushel of wheat is just as good as the next
• to prove this, Joey walked up to a bushel of wheat, picked out two stalks of wheat and held them up for the T.V. cameras
• One stalk was golden and beautiful, the other was withered and stained by bird droppings
• Joey the Benevolent Dictator then declared wheat as "non-fungible" because one stalk of wheat is not necessarily just as good as the next.

Yes, it is a silly example, but nonetheless how could a reader reconcile this scenario based on the wording above? A concise intro is fine if that's what you want, but if it's going to be concise, it shouldn't be circular. dr.ef.tymac 15:42, 12 March 2007 (UTC)

It's not possible to discuss whether a particular class of goods is fungible without first defining that class of goods. The class of "anything that vaguely resembles wheat" is not fungible, as noted above. The class of "wheat that meets applicable EU standards for human consumption" probably is.

I'm not sure that I like the wording. The very word "commodity" has connotations that the thing being described is fungible. In the electronics industry, one might discuss a "commodity flash chip". This implies that the flash chip is not a unique thing, but one of a type made by many manufacturers, all of whose products are interchangeable. The products may quickly be compared, considering only their price; in an efficient market, they should all be priced identically.

I think that the word "substitutable" is better than "interchangeable". If a class of objects is "fungible", then I can quickly, easily, and reliably determine a fair exchange between members of that class, and the measure of value that I use in doing so will not change with time. (For example, I can trade you a twenty dollar bill for two tens; that two-for-one exchange rate will always be true.) I would also be willing to interchange the twenty dollar bill with some number of Euros, but the exchange rate that I will use there is not nearly so well-defined, and will change with time.

A practical definition for "fungible" might simply be "that can be comingled without loss of information". I have to track my dollars and Euros separately. If I try to keep track of both as a single number, then that number will become wrong as soon as the EUR/USD exchange rate moves. This means that the class of "EUR and USD" is not fungible.

On the other hand, I don't have to keep a separate count of ten and twenty dollar bills; I just add up the total in dollars. That means that ten and twenty dollar bills are fungible. (Of course, they wouldn't necessarily have to be. If the market became flooded with counterfeit twenty dollar bills, but then tens were still okay, then perhaps the ten dollar bills would be become more valuable. At that point you would have to keep track of those separately.

The financial examples that were delete were not very clear, but I do think that something like a gift certificate qualifies as an example of non-fungibility. A gift certificate denominated in USD is probably not fungible with US dollar cash; in general, you'd rather have the cash. If the gift certificate is transferable, then you might try to resell for cash. If enough people do that, then a market will develop, and an exchange rate will exist, just as between EUR and USD. This exchange rate will be affected by many different factors; if the retailer who issued the gift certificates files for bankruptcy, then the gift certificates will probably become less valuable.

US dollars are fungible, and the gift certificates alone are fungible, but a set consisting of both US dollars and gift certificates is not.

A separate but related distinction is whether a set of non-fungible objects may be broken down into a small number of fungible subsets. For example, the set of world currencies is not fungible--as I said, I have to keep track of my EUR and my USD separately, or I lose information. But if I own only world currencies, then I can fully describe my net worth with only a few hundred numbers (i.e., my holdings of each world currency).

The same is true for shares of publically traded companies, but in that case, more numbers are required, because there's more public companies than currencies.

The diamonds aren't like this; each individual diamond must be valued individually, by a process that is slow, expensive, and open to debate. (Two assayers will agree within milligrams if you ask them how much gold is in a coin. Two diamond appraisers will not agree nearly so well.) This means that not only is the set of "diamonds" not fungible, but even if we break it down into smaller subsets (like "clear diamonds," and "yellow diamonds", and "diamonds mined in Africa"), the subsets still aren't fungible, until we have one subset per diamond.

There's still a finite number of diamonds in the world, so in a sense, you could appraise each one of them as it is mined and cut, and keep a very large, very careful database. If that were practical, then the sense in which "diamonds" are non-fungible would be the same sense in which "world currencies" are non-fungible. 24.91.135.162 23:07, 21 April 2007 (UTC)

Liquidity of diamonds problems

I like the comparision to diamonds in the introduction to make liquidity easy to understand, but is it correct? Diamonds are generally not considered liquid, in fact thats mentioned in the wiki pages on diamonds and diamond investments. Its quite hard to sell a used diamond. —The preceding unsigned comment was added by 74.121.14.242 (talk)

The market for diamonds is not highly liquid i.e. there are a large amount of buyers and sellers. Gold though is both liquid and fungible. nirvana2013 (talk) 12:13, 12 February 2008 (UTC)

What is a "used" diamond? I disagree, it is easier to sell a diamond than it is to sell a barrel of crude oil. I would sell a diamond at the same place you would sell a gold coin. Paul Beardsell (talk) 01:02, 27 January 2009 (UTC)

Understandability

This article is too dense. The first sentence is supposed to be an introduction to the details, but it's a mouthful. I'm not saying dumb it down, but please make it more clear to the uninitiated. thanks. 74.192.43.101 21:17, 9 October 2007 (UTC)

Agreed. This article seems to attract persistent attempts at turgid/stilted and/or unreadability-indifferent writing and/or verbage. Please give it a rest. dr.ef.tymac 21:56, 9 October 2007 (UTC)

I would certainly agree that it is difficult to understand. If I'm getting this straight - fungibility is the ability the exchange one unit of something for another unit of the same something? — Sasuke Sarutobi (talk) 01:10, 12 July 2008 (UTC)

Poor examples of fungible goods

Neither oil nor electricity are the best examples of fungible goods. I have commented in the article but better to do so here. Oil from different fields has different compositions, differs in price and ease of use for various purposes. Electricity suffers from significant transmission losses and is difficult to store - 1 kWh at one location is not fungible with another either elsewhere or at another time. We need better examples. I have provided one. Needs to be re-visited. Paul Beardsell (talk) 14:07, 24 September 2008 (UTC)

While your objections are all on point, the same objections can be raised about all things fungible. Money is fungible, but a hundred dollar bill is not equivalent to a one dollar bill. $100 in a local checking account is not equivalent to $100 in a CD in an out-of-state bank. $100 in cash here and now is not equivalent to $100 payable in Moscow 5 years from now. To be fungible, things must be at the same place at the same time and be the same grade and quantity. Barrels 1 and 2 of West Texas Intermediate Crude at the same port at the same time are fungible because nobody cares if barrel 1 is substituted for barrel 2. Likewise with electricity. When I pay my electric bill, I do not care whether the KWHs I consumed last month were generated in Texas or Kentucky. The consumed KWHs are fungible, not the generated KWHs. Greensburger (talk) 16:42, 24 September 2008 (UTC)

Some of the comments about currency missed the point. Notes and coins are physical representations of currency, and they exist merely for the sake of practical convenience. They may or may not be fungible with each other. But the currency they represent absolutely is fungible: one unit (dollar) of American currency is absolutely fungible with any other unit (dollar) of American currency. The dollar I have in my bank account is fungible with the dollar I have in my wallet. A $100 note is not fungible with a $5 note, but that is a differentiation based on volume, not quality: the $100 note represents 100 units of currency, the $5 note represents 5 units, and each of the 105 units (in total) is fungible with any of the others. That is the whole basis of currency: that an individual unit of currency is absolutely interchangeable with any other unit of equivalent value within the same currency. That is, there is not, and cannot be, any qualitative difference between one American dollar and any other American dollar. If you delve back into history, you will find that currency notes used to be referred as "promisory notes". Indeed, when I lived in Hong Kong in the 1980 and 90s, the notes were actually issued by two of the banks, and contained a legend: "Upon presentation of this $100 note, the Standard Chartered bank promises to pay the bearer one hundred Hong Kong dollars." Making it clear that the note is a representation, or token of the currency, not the currency itself. Of course, the fungibility of a currency only exists within that currency: one American dollar is fungible with any other American dollar, and one Indian rupee is fungible with any other Indian rupee; but American dollars and rupees are not fungible with each other. In this example, although we say "currency is fungible", this is only true within each class or type of currency. As for the time/place example, this confuses "units of currency" with "purchasing power". Though the purchasing power of a unit of currency changes over time, the actual value of the currency does not: if I put an American dollar in my pocket today, I can take that dollar to Moscow five years from now and exchange it with any other American dollar, so they remain fungible. Of course I can't necessarily exchange it for Russian currency, because they are not fungible and never were: that is a function of class, not time or place. If I agree to buy or sell something at a future date, there wil be complications, but those complications arise from the fact that purchasing power changes over time; they have nothing to do with the fungibility of the currency itself. For example, if I borrow $100 today and agree to repay it 10 years from now, you would object that not only does this earn you no interest, it doesn't take account of the fact that 10 years from now, $100 will buy less than it does today; in practice, you would be out of pocket. However, let's say we agree that 10 years from now, I will repay the $100 with $1,000. Now let's assume that I immediately set aside the $1,000 (perhaps, to keep the example realistic, we could assume that my $1,000 is tied up in an investment that doesn't mature for 10 years, but in the short term, I need to borrow $100). When I repay you in 10 years, you don't care whether I have had the $1,000 sitting in my wallet all along, or whether they are newly minted notes, or simply an electronic transfer. That's because even over time, the currency remains fungible (apart from rare instances, such as a re-issue of currency), even though its purchasing power changes. AlistairLW (talk) 06:25, 21 February 2012 (UTC)

That there are shades of grey does not mean that some shades are as almost as black as black and others so white as to put cream in the shade. One $100 bank note is fungible with any other $100 bank note. A barrel of oil is like a pint of beer, it just begs the question: What kind of beer? In order for two things to be fungible they must be able to substituted one for the other without giving cause for complaint for any of the parties involved. Your point about electricity is valid from the consumer's POV but not from the producers'. No! If we're going to give examples of fungibility we are going to give good ones, black and white ones, not indeterminate maybe ones, so that people can get best value from this encyclopedia. Paul Beardsell (talk) 14:20, 25 September 2008 (UTC)

Bank notes are not as black and white as you assume. Suppose I have three $100 bank notes. All three are genuine and issued in 2008. One is in Canadian dollars, one in Hong Kong dollars, one in US dollars. Are they fungible? They are readily convertable, but not fungible. This is not a matter of shades of gray, but of unlike kind. I agree that a barrel of heavy high sulfur crude oil and a barrel of light sweet crude are not fungible, but barrels of West Texas Intermediate Crude are fungible because they are standardized and must be to be traded on commodity exchanges. You object to electricity KWHs as an example of fungibility to the consumer, because I added the restrictions of time and location. But a US$100 banknote in Paris and a US$100 banknote in Seattle are not fungible, because of location and time to deliver. Two US$100 cashier's checks drawn on the same account in two different states are not even fungible, because of the risk that the checks may be bogus and collection in another state may be more difficult. Greensburger (talk) 00:53, 26 September 2008 (UTC)

Obviously (c'mon!) we're talking the same currency, and my simple fix to the article obviates the need for your long and unnecessary explanatory paragraph. Paul Beardsell (talk) 02:56, 26 September 2008 (UTC)

We may be talking about the same currency but we shouldn't be. If you say that money is fungible, then 1 unit of money from one producer would have to equal 1 unit of money from another producer. An example, would that one bushel of wheat harvest in the US and just as substitutable as a bushel of wheat harvested in the Canada. This does not work for currency since 1 US Dollar cannot be substituted for 1 Canadian Dollar. A better way to phrase it would be to say that he US Dollar is fungible, as it can be traded for other US dollars whether produced by the Federal Reserve or the US Treasury. I will make this change in a week or so if no one objects. Sqy0h (talk) 23:11, 3 May 2012 (UTC)

As for your check example, two checks drawn on the same account for the same amount made payable to the same payee *are* fungible. (Other possibly for than some arcane US-only banking rule of which I am unaware.) Two [US]$100 notes are fungible. If one is exchanged for another neither party will care. If that exchange occurs then they must be in the same place, so there is no need to mention that. I did *not* object to the electricity appearing fungible from the consumer's perspective - I explicitly allowed that - but pointed out that the producer's perspective is different *becuase* electricity is lost when it is moved and is very difficult to store.

I am simply suggesting we need more clear cut and less controversial examples than the ones you are defending. Were you the author of them? Paul Beardsell (talk) 03:04, 26 September 2008 (UTC)

Look at the definition on the following page:

Fungible Goods

It says same grade and quality and same kind and quantity, which I assume you have no objection to. But it also says "any of which is as acceptable as another... on demand". I tried to give examples of things having the same kind, grade, quality, and quantity that would NOT be acceptable to a reasonable person. For example, 1000 bushels of wheat that are fungible in all respects except the grain elevator says the bins are empty but you can take delivery 2000 miles away at the grain elevator affiliate. "On demand" implies same place and same time. Greensburger (talk) 04:43, 26 September 2008 (UTC)

"On demand" means different things depending upon the particular fungible good/service. But, really, I find little to disagree with: I just want the best examples in the article, not examples which require a mile of verbiage to clarify. Paul Beardsell (talk) 07:09, 26 September 2008 (UTC)

Etymology

The etymology given on this page and the etymology given on wikitionary are different. Which is correct? — Preceding unsigned comment added by 75.87.250.78 (talk) 01:21, 17 October 2011 (UTC)

They mean the same thing. Fungor is the first person indicative of the deponent verb of which the infinitive is fungi. People studying Latin usually memorize verbs with the fpi first, then the infinitive, then 2 other parts. This was called in my studies "the dictionary form". People who teach themselves Latin often focus on infinitives "to do something". Here the problem is that the two etymologies give the same information but in different ways.

Is there a technical term for something that is not fungible? --Richardson mcphillips (talk) 19:14, 20 July 2012 (UTC)

MIsuse in the HIPC scheme

I've removed this section. It seemed to be nothing but political axe-grinding that added noting to the understanding of the article's topic. The claims may very well be true but there were no sources and the BLP violation argued for deletion rather than tagging. Cheers. L0b0t (talk) 13:30, 10 September 2012 (UTC)

I think the section is salvageable, but belongs in the Heavily indebted poor countries article. —Cupco 16:19, 10 September 2012 (UTC)

Useless lede

I'm afraid this article is completely opaque. I surfed in to find out what fungibility is. After reading the first paragraph several times, I still don't know. (One ounce of gold equals one ounce of gold. We needed a WP entry for that?)

Evidently, "fungibility" is an arcane concept not encountered in normal human interaction. I come to that conclusion given that the entry doesn't simply state: "Fungibility is (four to eight concrete words)." Given that, could someone who knows what fungibility is rewrite the lede from the ground up so that it defines the term in plain, short, concise language? Bear in mind that fine points of distinction can (and should) be introduced in the rest of the article. The lede is for sweeping generalisations; we can dance angels on the pin afterward. Laodah 00:59, 2 April 2016 (UTC)

Non-Fungible Tokens

Given the recent discussion of Non-Fungible Tokens, I'm wondering if it's reasonable to add a link to that topic here, or more likely the inverse. Iggynelix (talk) 20:33, 20 January 2022 (UTC)

Ah. Never mind.. it's there just further down. Iggynelix (talk) 20:37, 20 January 2022 (UTC)