When is money considered central bank money?

Money is considered central bank money when it is held in accounts at the central bank. This type of money typically refers to reserves held by commercial banks at the central bank, as well as physical cash or banknotes issued by the central bank itself. Central bank money serves as the foundation for the monetary system, providing liquidity and stability to the financial system.

The uniqueness of central bank money lies in its role as a settlement asset in the banking system. It is the most liquid form of money because it is accepted universally for settling debts and transactions. In contrast, options like physical banknotes from commercial banks or electronic money held at commercial banks do not qualify as central bank money because they represent liabilities of those banks, not the central bank itself. Similarly, any bank account, regardless of whether it is held at a central or commercial bank, does not necessarily represent central bank money unless it is specifically an account at the central bank.