A government with a currency board is legally bound to hold an amount of foreign currency that is at least equal to the amount of domestic currency.

Question

Quizplus · Accepted Answer

A currency board is a monetary authority that issues a fixed exchange rate and is required to hold foreign reserves equal to the domestic currency in circulation. This ensures that the exchange rate remains stable and prevents the overprinting of money.

A Government with a Currency Board Is Legally Bound to Hold