Editing Currency board (section)

{{short description|Monetary authority which maintains a fixed exchange rate to a foreign currency}}
{{Public finance}}
{{about|the currency board mechanism|individual past entities named Currency Board (or Board of Commissioners of Currency)}}

In [[public finance]], a '''currency board''' is a mechanism by which a [[monetary authority]] is required to maintain a [[fixed exchange rate]] with a foreign [[currency]] by fully backing the commitment with foreign holdings, or reserves. This policy objective requires the conventional objectives of a [[central bank]] to be subordinated to the exchange rate target. 

Although a currency board is a common (and simple) way of maintaining a fixed exchange rate, it is not the only way. Countries often keep exchange rates within a narrow band by regulating [[balance of payments]] through various [[capital control]]s, or though international agreements, among [[Fixed exchange rate system#Hybrid exchange rate systems|other methods]]. Thus, a rough peg may be maintained without a currency board.