The situation whereby a nation adopts another nation's currency as its legal tender is known as:
A)Currency board arrangements
B)Dollarization
C)Crawling peg system
D)Managed floating exchange rate system

Question

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The situation whereby a nation adopts another nation's currency as its legal tender is known as dollarization. This means that the country completely gives up its own currency and relies on the adopted currency for all its transactions. Currency board arrangements refer to a fixed exchange rate system where a country's central bank promises to exchange its currency with a foreign currency at a fixed rate. Crawling peg system refers to a fixed exchange rate system where the exchange rate is adjusted periodically to reflect changes in inflation and other economic variables. Managed floating exchange rate system refers to a flexible exchange rate system where the central bank intervenes in the forex market to manage the exchange rate.

The Situation Whereby a Nation Adopts Another Nation's Currency as Its