Under the Exchange Rate Mechanism of the European Monetary System,when the German mark depreciated below its lower limit against the British pound,the Bank of England was required to buy ________ and sell ________,thereby ________ international reserves.

Question

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C)marks;pounds;gaining. Under the mechanism, if the German mark depreciated below its lower limit against the British pound, the Bank of England would buy marks and sell pounds to support the mark. This action would increase the Bank of England's holdings of foreign currency (marks), thereby increasing its international reserves.