Adoption of a Currency Board

question 5

Multiple Choice

Adoption of a currency board

• A)is one method for achieving a soft peg policy.
• B)requires that a centralized institution holds interest-bearing assets denominated in the currency against which the nominal exchange rate is being fixed.
• C)mandates how the seigniorage revenue from the printing of money is to be distributed.
• D)mandates the use of currency in all domestic transactions.
• E)places responsibility for exchange rate management in the hands of an agency that is independent of political influences.

---

Definitions:

Call Provision

A feature on a bond allowing the issuer to redeem the bond before its maturity date.

Premium Bond

A bond sold at a price higher than its face value, typically because it offers interest rates higher than the current market rates.

Discount Bond

A bond sold for less than its face value, where the difference between the purchase price and the face value represents the investor's return.