ABSTRACT
In textbooks central banks have a very simple balance sheet: their liabilities consist of the monetary base. On the asset side one finds either domestic assets, that is, claims on domestic banks or the government, or foreign assets, that is, foreign exchange reserves. Some authors add that capital also appears on the liability side and that the accounting for losses and gains on foreign assets due to exchange rate changes is difficult. Overall, however, the impression one gets from textbooks is that the balance sheet of a central bank should be simple. This is not the case in reality.
