How Can Currency Boards and Dollarization Prevent Currency Crises

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The Answer is A currency board is a monetary authority that issues notes and coins convertible into a foreign currency at a fixed exchange rate. The most vital contribution a currency board can make to exchange rate stability is to impose discipline on the process of money creation. This results in greater stability on domestic prices, which, in turn, stabilizes the value of the domestic currency. Dollarization occurs when residents of a county use the U.S. dollar alongside or instead of their own currency. Dollarization is seen as a way to protect a country's growth and prosperity from bouts of inflation, currency depreciation, and speculative attacks against the local currency.

How Can Currency Boards and Dollarization Prevent Currency Crises

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How Can Currency Boards and Dollarization Prevent Currency Crises

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Correct Answer:
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