Fungible? Can someone please explain to me what this means?

Question

The dictionary is of little help. An example would make it clearer I think.

The dictionary says: being of such a nature that one part or quantity may be replaced by another equal part or quantity in the satisfaction of an obligation <oil, wheat, and lumber are fungible commodities>

But what does that mean?? Does it mean that if I owe $200 dollars in debt I can pay with $200 worth of wheat? OR does it mean that if I owe $200 dollars worth of wheat I can instead of paying the debt in cash pay with wheat?

Answer 1

Your explanation is fair.  I would add, you could &quot;trade&quot; your wheat for an appropriate value of apples too!

Answer 2

It means that  one barrel of oil  is the same as  any other so  if you borrow a  barrel of oil you can repay the debt with any barrel available, and it need not be the one you borrowed. This is true of all commodities such as wheat, gaols, lumber etc.