<p>It is not listed as a liability but as an equity. Balance sheet has two sides Asset Side is the left hand side of balance sheet (by convention) and right hand side is the equity and liability side.</p>
<p>I am assuming you are referring to this picture shown below from the pp 3 of Bindseil and Fotia. This picture shows that households are assumed just to have equity, no there are no household liabilities in the picture below, just assets and equity.</p>
<p><a href="https://i.sstatic.net/q3Zat.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/q3Zat.png" alt="enter image description here" /></a></p>

CC BY-SA 4.0
2022-03-08T18:56:30.240Z
2022-03-08T18:56:30.240Z
1muflon1
<p>I am currently reading &quot;An introduction to Central Banking&quot; written by Ulrich Bindseil and Alessio Fotia, which is freely accessible here : <a href="https://library.oapen.org/viewer/web/viewer.html?file=/bitstream/handle/20.500.12657/49520/9783030708849.pdf?sequence=1&amp;isAllowed=y" rel="nofollow noreferrer">https://library.oapen.org/viewer/web/viewer.html?file=/bitstream/handle/20.500.12657/49520/9783030708849.pdf?sequence=1&amp;isAllowed=y</a>.</p>
<p>At the very beginning, on page 3, they show a table of a simplified gold standard economic system with the assets and liabilities of households, the corporate sector and the state. The table  looks somewhat like this</p>
<p>All Assets and Liabilities are expressed in terms of their monetary value.</p>
<p><strong>Households</strong></p>
<p><em>Assets</em>:</p>
<p>Real Assets = Household Equity - Gold - Company Equity - Company Debts - State Debts</p>
<p>Company Equity</p>
<p>Company Debt</p>
<p>State Debt</p>
<p><em>Liabilities</em>:</p>
<p>Household Equity</p>
<p><strong>Corporate Sector</strong></p>
<p><em>Assets:</em></p>
<p>Real Assets = Company Equity + Company Debt</p>
<p><em>Liabilities:</em></p>
<p>Corporate Equity</p>
<p>Debt</p>
<p><strong>Government</strong></p>
<p><em>Assets:</em></p>
<p>Real Assets = State Equity + State Debt</p>
<p><em>Liabilities:</em></p>
<p>State Equity</p>
<p>State Debt</p>
<p>I feel silly asking that question, - perhaps there is a fundamental principle I didn't get -, but why is household equity and state equity on the liability side of the balance sheet from the point of view of households and the state? It is a liability to whom? On the same page, the authors write &quot;in the case of the government, equity is a genuine own equity and not an external capital owned by another party (as household equity)&quot; which makes the issue even more confusing for me.</p>

<finance><central-banking><accounting>
why is household equity a liability for households
jimsalsa
# why is household equity a liability for households

(Asked by: username_0 on 2022-03-08)

I am currently reading "An introduction to Central Banking" written by Ulrich Bindseil and Alessio Fotia, which is freely accessible here : <https://library.oapen.org/viewer/web/viewer.html?file=/bitstream/handle/20.500.12657/49520/9783030708849.pdf?sequence=1&isAllowed=y>.

At the very beginning, on page 3, they show a table of a simplified gold standard economic system with the assets and liabilities of households, the corporate sector and the state. The table looks somewhat like this

All Assets and Liabilities are expressed in terms of their monetary value.

**Households**

*Assets*:

Real Assets = Household Equity - Gold - Company Equity - Company Debts - State Debts

Company Equity

Company Debt

State Debt

*Liabilities*:

Household Equity

**Corporate Sector**

*Assets:*

Real Assets = Company Equity + Company Debt

*Liabilities:*

Corporate Equity

Debt

**Government**

*Assets:*

Real Assets = State Equity + State Debt

*Liabilities:*

State Equity

State Debt

I feel silly asking that question, - perhaps there is a fundamental principle I didn't get -, but why is household equity and state equity on the liability side of the balance sheet from the point of view of households and the state? It is a liability to whom? On the same page, the authors write "in the case of the government, equity is a genuine own equity and not an external capital owned by another party (as household equity)" which makes the issue even more confusing for me.

**Tags:** finance, central-banking, accounting


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## 1 answers

### Answer by username_1 on 2022-03-08. Score: 1

It is not listed as a liability but as an equity. Balance sheet has two sides Asset Side is the left hand side of balance sheet (by convention) and right hand side is the equity and liability side.

I am assuming you are referring to this picture shown below from the pp 3 of Bindseil and Fotia. This picture shows that households are assumed just to have equity, no there are no household liabilities in the picture below, just assets and equity.

[![enter image description here](https://i.sstatic.net/q3Zat.png)](https://i.sstatic.net/q3Zat.png)


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