When an exchange-rate crisis befalls a pegged currency,experience suggests that damage to the economy may be minimized by ________.

Question

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Abandoning the peg is the best choice when an exchange-rate crisis hits a pegged currency. This allows the currency to find its market value, which can help in stabilizing the economy. Appealing to creditors for liquidity and launching speculative counter-attacks are unlikely to be effective in minimizing the damage to the economy. While adopting a currency board could be a viable option, it may take time to implement and may not be the most effective solution in the short term.

When an Exchange-Rate Crisis Befalls a Pegged Currency,experience Suggests That