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Chapter 15: Q. 10 (page 347)

In what sense is currency a liability of the Federal Reserve System?

Short Answer

Expert verified

The money in backlog gets into circulation, then it's to be termed as liability ofFRS Bank.

Step by step solution

01

Federal Reserve System

Here, as we all know that the Fed is that the Federal Reserve System System, which is the nation's financial institution. Additionally, a liabilityis that the amount owed. In other words, the legal claims against a business or household by non-owners.

02

Treasury

The currency of theFederal Reserve System System, legallyit's the liability of thecentral bank Banks and obligations of the U.S. government. Although not issued by theDepartment of the Treasury,Federal Reserve notes carry the signature of the treasurer of the U.S. and U.S. Secretariat of the treasurer.

03

Fed System

Federal Reserve notes are authorized by U.S. code.additionally, are issued to theFRS Banks at the discretion of the Board of Governors of theFed System.

04

Backlog

TheFRS Bank puts the notes into circulation. Atnow, they become liabilities of theFederal Reserve Bank.

Thus, whenthe money inbacklog gets into circulation, thenit's to be termed as liability ofFRS Bank.

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