An institution that issues a currency at a fixed rate in exchange for an equivalent amount of another designated currency and invests the funds in bonds and liquid assets that provide 100 percent backing for the currency units issued is called

Question

Quizplus · Accepted Answer

The description matches that of a currency board, which is an institution that issues a currency at a fixed rate in exchange for an equivalent amount of another designated currency and invests the funds in bonds and liquid assets that provide 100 percent backing for the currency units issued. A central bank issues currency but may not have a fixed exchange rate or 100 percent backing for the currency, while the International Monetary Fund and the World Trade Organization are international organizations focused on monetary policy and trade, respectively, but do not issue currency.

An Institution That Issues a Currency at a Fixed Rate