A developing country might want to commit itself to converting its domestic currency on demand into another currency at a fixed exchange rate. To do this, it should implement a(n)
A) free-float exchange rate system.
B) clean-float exchange rate system.
C) pure-float exchange rate system.
D) currency board.
E) gold standard.

Question

Quizplus · Accepted Answer

A currency board is a monetary authority that maintains a fixed exchange rate with a foreign currency, ensuring that the domestic currency can be converted on demand at this fixed rate.

A Developing Country Might Want to Commit Itself to Converting