Question

Currency of a country is?? 1 Asset to public & asset to central bank
2 Liabilty to public &asset to central bank
3 Liability to public &liability to central bank
4 An asset to public& Liability to central bank

Answer 1

Answer:

The correct option for the above question is an option (4) An asset to public and liability to Central Bank.

Explanation:

Every financial asset is a liability for one or the other. If one enjoys the financial asset as an asset, the other will surely have it as a liability. In the case of Central bank, it issues the currency and whenever the State Banks need money, they will come to the Central bank for money.

The Central Bank will provide them with the cash or the money but in return, the State Banks will be required to deposit loans with the Central Bank as a guarantee. On this guarantee only, the Central Bank will issue the money to the State Banks.