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When a depositor withdraws cash from her bank's ATM machine, (a) the size of the central...

When a depositor withdraws cash from her bank's ATM machine, (a) the size of the central bank's balance sheet does not change, but (b) the composition of its liabilities changes. True or false?

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Answer #1

True.

when individuals withdraw money, it does not affect cental bank balance sheet because there are lot of money in circulation and checkable balance help in maintaining money supply in economy.

In bank our money is bank capital, and it showed on a side of liability as reserves. When we withdraw money this reserves simply change into currency.i.e From reserves to currency, but in balance sheet these reserves decreases, hence it become a liability for central bank.

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