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17 December, 21:04

A currency board exists when a country's central bank commits to back its money supply entirely with foreign reserves at all times. True False

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  1. 17 December, 21:24
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    True.

    Explanation:

    Currency board is aimed at pegging a countrie's currency. Management of monetary authorities make decisions on valuation of a countrie's currency. When local currency is pegged to a foreign currency, there will be an equal amount of the currency held in the reserves.

    The control board now allows for unlimited exchanged between the pegged local currency and the foreign currency in the reserves.
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