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What are fixed exchange rate system and currency board system?

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What are fixed exchange rate system and currency board system?
posted Jul 12, 2017 by Mukul Chag

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A fixed exchange rate system is where a country's exchange rate regime under which the government or central bank ties the official exchange rate to another country's currency (or the price of gold). The purpose of a fixed exchange rate system is to maintain a country's currency value within a very narrow band. Also known as pegged exchange rate.

A currency board is a monetary authority which is required to maintain a fixed exchange rate with a foreign currency. This policy objective requires the conventional objectives of a central bank to be subordinated to the exchange rate target.

answer Jul 13, 2017 by Ramesh Gowda
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