Currency Board

Entity charged with maintaining the value of a local currency with respect to some other specified currency. Bloomberg Financial Dictionary

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   A strict exchange rate system in which a country pegs its currency firmly to another, such as the dollar or the euro. The currency board guarantees full convertibility of the country's notes and coins into the reference currency at a fixed exchange rate. Because of that guarantee the board cannot issue more notes and coins than it can match with its holdings of foreign currency. As a result the currency board's operations are automatic and passive. This system prevents the government financing its operations by printing money thereby creating inflation.

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currency board UK US noun [C]

► ECONOMICS, FINANCE, GOVERNMENT a government organization in some countries that controls the value of its country's currency, often by setting a fixed exchange rate with the currency of another country: »

The currency board in effect promises, if need be, to swap dollars for pesos at the stated parity without limit.

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A currency board has as its sole mission guaranteeing the value of the currency.