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Saturday, July 26, 2008

Fungibility

Fungibility is a premise according to which all instances of a given commodity that meet certain standards are considered interchangeable in trade.

In finance, fungible refers to the ability of one security to be easily converted into another related security. For instance, stocks are often listed on several stock exchanges, and a fungible stock would allow you to exchange the shares purchased on one exchange for shares on another. Not all securities are fungible in this way, but those that are are somewhat more liquid and protected from volatility on one particular exchange.

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



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