Notes in circulation are:
A)an asset as viewed by the Bank of Canada.
B)a liability as viewed by the Bank of Canada.
C)neither an asset nor a liability as viewed by the Bank of Canada.
D)part of M1, but not of M2 or M2+.

Question

Quizplus · Accepted Answer

Notes in circulation are a liability for the Bank of Canada because they are a liability that the bank owes to the bearer of the currency. The Bank of Canada has promised to redeem the notes for their face value upon demand, making them a liability on the bank's balance sheet.

Notes in Circulation Are