Which of the following statements is true?
A)Exchange settlement accounts allow each FI to have settlement for transactions that occur by the adjustment of credit balances held with the central bank.
B)The central bank acts purely as a settlement agent.
C)The central bank is not exposed to any credit risk.
D)All of the listed options are correct.

Question

Quizplus · Accepted Answer

- A) Exchange settlement accounts (ESA) do allow FIs to have settlement for transactions by the adjustment of credit balances with the central bank. 
- B) The central bank acts as a settlement agent for various payments and transactions between FIs, government entities, and other central banks. 
- C) The central bank may be exposed to credit risk concerning loans or investments it makes, but not in the context of its role as a settlement agent. Therefore, all of the listed options are correct.

Which of the Following Statements Is True