In a simple currency board arrangement, a country can issue

Question

Quizplus · Accepted Answer

In a currency board arrangement, the domestic currency is pegged to a foreign currency, and the currency board can only issue domestic currency when it has an equivalent amount of foreign currency on reserve. This ensures that the domestic currency maintains its value and stability relative to the pegged foreign currency. Therefore, choice C is the correct answer. The other choices involve the discretionary issuance of either domestic or foreign currency, which is not characteristic of a currency board arrangement.

In a Simple Currency Board Arrangement, a Country Can Issue