In a reserve currency system (such as the Bretton Woods system or the European ERM), currencies peg to a reserve currency. As a result:
A) only the reserve currency country has monetary autonomy.
B) all countries, other than the reserve currency country, have monetary autonomy.
C) all countries have monetary autonomy.
D) no country has monetary autonomy.

Question

Quizplus · Accepted Answer

In a reserve currency system, other countries peg their currency to the reserve currency. This means that the value of their currency will be tied to the reserve currency, and their monetary policy will be influenced by the monetary policy of the reserve currency country. Therefore, only the reserve currency country (e.g. US in the case of Bretton Woods system) has complete monetary autonomy, while other countries have limited autonomy.

In a Reserve Currency System (Such as the Bretton Woods