A currency board is set up to:
A) manage free-floating currencies.
B) gradually eliminate currency pegs.
C) give a peg added durability.
D) immediately eliminate currency pegs.

Question

Quizplus · Accepted Answer

A currency board is a monetary authority that issues a specific amount of currency that is fully backed by a foreign reserve currency. This system gives a peg added durability because it requires the country to hold enough foreign reserves to back its currency in circulation. This helps to maintain the fixed exchange rate and reduces the risk of currency crisis, which are common with pegged currencies that don't have the backing of sufficient foreign reserves.

A Currency Board Is Set Up To