Origins
Water has shaped the vocabulary of finance, and liquid is the proof. The word comes from Latin liquidus, meaning 'fluid, flowing, moist', from liquēre — 'to be liquid'. The Latin root traces to PIE *wleykʷ- ('to flow').
In its original Latin sense, liquidus meant not just 'wet' but 'clear'. A liquid account was a settled one — the debts had flowed away, leaving clarity. This meaning persisted into medieval law and commerce. To liquidate a debt was to dissolve it, to make it flow into nothing.
The physical sense arrived in English in the 14th century. The financial sense — liquid assets, liquid capital — crystallised in the 19th century, treating money as something that should flow freely, without friction or obstruction. Illiquid assets are frozen, stuck, unable to move.
Latin Roots
Liquor is the most direct relative: Latin liquor simply meant 'fluid, liquid'. The restriction to alcoholic drink happened in English. Liqueur, borrowed separately from French, carries a sweeter connotation.
The darkest descendant is liquidate in its killing sense. This entered English from Soviet Russian in the 1920s, where likvidirovat' was official bureaucratic language for execution — making a person disappear as cleanly as a settled debt. The euphemism was chilling precisely because it borrowed the vocabulary of accounting: eliminating a life was just closing a ledger.