. However, the currency issued by the central bank is its monetary liability. In other words, the central bank is obliged to back the currency issued by it by assets of equal value such as gold coins andbullions,foreign exchange.what does this mean?

Hey Saumya,

It simply means that if there exists any currency issue such as, non-acceptance of currency, then the central bank is responsible to give the assets of the same amount (i.e equal to currency value) to the public. These assets can be gold coins, foreign exchange, etc.

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hello Saumya ,
this means if a central bank need to print more currency ( of such country i.e. Rupee of India ) they have to give security( i.e gold ) of same amount as deposits against it.....its a condition for printing currency.........
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