Key terms
- Currency board
- An exchange rate arrangement in which the law fixes the domestic currency to one foreign currency and obliges the issuer to swap the two at that rate on demand, so the domestic currency is normally backed in full by reserves of the foreign one.
- Conventional peg
- An exchange rate fixed by the authorities to another currency or a basket of currencies and defended by buying and selling foreign exchange or by setting interest rates, with no promise to keep the rate for ever.