Which of the following is not considered a liability on a central bank's balance sheet?

A central bank's balance sheet comprises various components, each playing a crucial role in its operations. Among these components, liabilities represent the central bank's obligations. Currency issued by the central bank is indeed a liability because it is a claim that the central bank must honor when it is exchanged for goods or services. Similarly, a government account at the central bank and the reserve accounts of commercial banks are also considered liabilities because they involve funds that the central bank is obligated to return or settle.

However, loans made by the central bank to financial institutions are classified differently. They are considered assets on the central bank’s balance sheet, as they represent funds that the central bank has provided to borrowers. The expectation is that these loans will be paid back with interest, allowing the central bank to earn income from its lending activities. In this context, categorizing loans as a liability would misrepresent their role in the central bank's financial structure. Thus, recognizing loans as an asset rather than a liability is essential for an accurate understanding of the central bank’s balance sheet composition.