A ________ is a monetary regime that is based on an explicit commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate.
A) currency option
B) currency board
C) currency speculation
D) currency arbitrage

Question

Quizplus · Accepted Answer

A currency board is a monetary regime that operates under a fixed exchange rate system. It is characterized by an explicit commitment by the central bank to exchange domestic currency with a specified foreign currency at a fixed exchange rate. This requires the central bank to hold a large amount of foreign currency reserves to back the domestic currency in circulation.

A ________ Is a Monetary Regime That Is Based on an Explicit