How Does a Country That Introduces a Currency Board Make

question 21

Multiple Choice

How does a country that introduces a currency board make its commitment to converting its domestic currency on demand into another currency at a fixed exchange rate credible?

• A) borrowing funds from the International Monetary Fund and the World Bank
• B) maintaining a trade surplus with foreign countries
• C) holding foreign currency reserves equal at the fixed exchange rate to at least 100 percent of the domestic currency issued
• D) importing more goods from foreign countries than it exports
• E) printing foreign currencies

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