Explanation:
International Liquidity is the sum total of international reserves of all the nations participating in the world monetary and trading system. The term ‘International Liquidity’ comprises all those financial resources and facilities which are available to monetary authorities of member nations for financing the deficits in their international balance of payments. The problem of international liquidity is concerned with the imbalances in the demand for and supply of international liquidity.
As dollar is the dominating component in the forex, the problem of international liquidity is related to the non-availability of dollar and other hard currencies.
