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    Currency board & central bank - nominal exchange rate target

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    Describe the chief differences between a currency board and a central bank with a nominal exchange rate target.

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    First, the central bank controls the money supply by setting the nominal exchange rate target and then adjusting the money supply to achieve that target. Under a currency board system, there is no central bank. The currency board passively responds to the demand for domestic money by buying or selling foreign exchange for ...

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