Earlier quoted context omitted.
« The “electronic cash” envisioned by Satoshi is cash; it is not notes, scrip or bank credits. We have come to think of bank notes as cash, but they are actually contracts for debt. The note holder is owed something by the issuer. Cash is a commodity with certain properties that make it useful as money. Cash is largely gone from the world, and people cannot return to physical commodity money, as it cannot be moved on…
Modern day paper currency are not debt instruments. They are very much cash. Whether bitcoin is used for direct payments or payment channel settlements is irrelevant. What is important is self-custody. Cash works and has the properties it does because it is a (mostly) fungible bearer bond. Bitcoin is also a (mostly) fungible bearer bond regardless of whether you transact on chain or through lightning.
Cash was the gold that you used to be able to redeem said liabilities for. These days, you can simply transfer the bank's liability to you to someone else, as a way to offset your own liability.
Just because the bank has no intention of ever paying cash at this point ever since Nixon left behind specie payments doesn't change the fact that these notes are still issued as liabilities.
And when I say issued by the central bank, I do mean only the paper bills that are issued. Most money that exists in bank accounts is issued by the various commercial banks that operate within the banking system (when they issue you a loan, they don't go out and find other money; they simply credit your account with the amount of the loan, and that money was simply loaned into existence as a liability of that bank).