When exchange rates are fixed by central bankers,the need for international reserves disappears.

Question

Quizplus · Accepted Answer

Even when exchange rates are fixed by central bankers, the need for international reserves may still exist in order to maintain confidence in the fixed exchange rate system and to provide a cushion against external shocks. International reserves may also be used to intervene in the foreign exchange market to maintain the fixed exchange rate.

When Exchange Rates Are Fixed by Central Bankers,the Need for International