Which of the following statements is true about a currency board syste

QUESTION

Which of the following statements is true about a currency board system?

A. Under a strict currency board system, interest rates adjust automatically based on the supply and demand of domestic currency.

B. To convert domestic currency on demand into another currency, a currency board takes grants from the International Monetary Fund.

C. This system is a true fixed exchange rate regime, because the domestic currency is fixed against other currencies.

D. A currency board can issue additional domestic currency even when there are no foreign exchange reserves to back it.

E. A currency board authorizes the government to print money and set interest rates.

ANSWER

A