If a developing country institutes a currency board, it relinquishes control over having

Question

Quizplus · Accepted Answer

Instituting a currency board means pegging the country's currency to a foreign currency, and thus relinquishing control over its monetary policy. The interest rates and money supply are determined by the currency to which it's pegged.

B, C, D, and E are incorrect because currency boards can provide exchange rate stability, restrict capital movement, control labor movement, but do not require giving up all of the country's funds.

If a Developing Country Institutes a Currency Board, It Relinquishes