A currency board exists when a country's central bank commits to back its money supply entirely with foreign reserves at all times.

Question

Quizplus · Accepted Answer

A currency board is a monetary authority that issues a country's currency and maintains a fixed exchange rate with a foreign currency by holding enough foreign reserves to fully back the domestic currency in circulation. This means that the central bank commits to convert its domestic currency into the foreign currency at a fixed exchange rate, and vice versa, at any time and without restriction.

A Currency Board Exists When a Country's Central Bank Commits