In the consolidated balance sheet of the Bank of Canada, chartered bank reserves held by the Bank of Canada are:
A)a liability of the Bank of Canada and chartered banks.
B)an asset of the Bank of Canada and chartered banks.
C)a liability of the chartered banks and an asset for the Bank of Canada.
D)an asset of the chartered banks and a liability for the Bank of Canada.

Question

Quizplus · Accepted Answer

Chartered bank reserves held by the Bank of Canada are considered an asset for the chartered banks because they represent funds that the banks have deposited with the central bank. Conversely, these reserves are a liability for the Bank of Canada because they are obligations that the central bank must honor.

In the Consolidated Balance Sheet of the Bank of Canada