Under what condition is money issued by a central bank considered not to be central bank money?

Money issued by a central bank is considered central bank money when it exists in forms that are directly accessible and used for settling transactions within the economy. This includes cash in circulation as well as reserves that commercial banks hold at the central bank.

In the scenario where central bank money is held electronically at a commercial bank, it becomes a liability of that commercial bank instead of being classified directly as central bank money for the purpose of certain transactions. This distinction arises because, although the funds still represent central bank money, they are no longer at the central bank and thus are subject to the rules and conditions of the commercial banking system. In this situation, the electronic balance does not directly reflect the central bank's role in the money supply but rather shows the relationship between the commercial bank and its customers.

When it comes to holding cash or exchanging money between individuals, those transactions remain linked directly to the central bank's issuance. Depositing funds into a savings account maintains that connection, as those funds still technically relate to the central bank's money supply. Thus, the electronic holding at a commercial bank distinctly signifies that the money is not functioning directly as central bank money in terms of liquidity and transaction facilitation.