Editing Currency board (section)

=== Consequences of adopting a fixed exchange rate as prime target ===
The currency board in question will no longer issue [[fiat money]] but instead will only issue one unit of local currency for each unit (or decided amount) of foreign currency it has in its vault (often a [[hard currency]] such as the [[United States dollar|U.S. dollar]] or the [[euro]]). The surplus on the [[balance of payments]] of that country is reflected by higher deposits local banks hold at the central bank as well as (initially) higher deposits of the (net) exporting firms at their local banks. The growth of the domestic money supply can now be coupled to the additional deposits of the banks at the central bank that equals additional hard [[foreign exchange reserves]] in the hands of the central bank.