Hanke's currency board

Hanke’s currency board is a monetary system where a country's currency is directly backed by a foreign currency, typically the US dollar or euro, held in reserve. This means the domestic currency can be exchanged for the foreign currency at a fixed rate, ensuring stability and trust. It limits the government’s ability to print money freely, reducing inflation risk. Essentially, the country commits to maintaining enough reserves to exchange its currency at the set rate, promoting economic stability and confidence among residents and investors.