A country that introduces a(n)______________ commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate.
A) currency board
B) monetary review commission
C) exchange rate review commission
D) certificate board
E) IMF pegged rate regime

Question

Quizplus · Accepted Answer

A currency board is a monetary authority that issues a domestic currency and commits to converting it on demand into a foreign currency at a fixed exchange rate. This fixed-rate regime requires currency boards to hold a reserve of the foreign currency to back the domestic currency in circulation. This mechanism provides stability to the domestic currency and makes it more attractive to foreign investors. The other options, such as monetary review commission, exchange rate review commission, and certificate board, do not exist in practice as monetary authorities or policy tools. The IMF pegged rate regime exists but refers to an international agreement between countries rather than a domestic policy choice.

A Country That Introduces A(n)______________ Commits Itself to Converting Its