This representation distinguishes different types of liquidity depending on its issuer: •  Outside liquidity comprises currency or, more generally, central bank overnight liabilities. These liabilities are what we typically understand as “money” in the narrowest sense of the word.
In our modern fiat-money systems, this form of money is backed by a legal and social promise to essentially preserve its purchasing power and transaction services over time. •  Inside liquidity is a much broader object, including short-dated money-like liabilities that are issued by the private entities and thus backed by private credit.