1. A currency board requires a nation to have reserves of the anchor currency equivalent to each unit of local currency they issue at the pegged rate. However the national government in the particular country is still the monopoly issuer of its own currency.

2. A nation that runs a currency board has to seek ways to ensure exports exceed imports to avoid a future of domestic stagnation because the monetary base has to shrink every time net exports are negative.

3. It is clear that an open market purchase by the central bank in the secondary bond markets gives the private sector more cash which means the monetary base expands if nothing else happens.

4. The Reserve Bank of Australia currently seeks to maintain a policy interest rate of 3.75 per cent as its statement of monetary policy. As a consequence, unless it was prepared to pay the same rate on overnight reserves held with it by the commercial banks, then any government net spending has to be offset with debt-issuance.

5. There are millions of idle dollars sitting in bank reserve accounts at present as a result of the so-called central bank liquidity operations. While bank loans create deposits and the banks then add necessary reserves as part of a separate operation, it is clear that the huge stock of idle reserves, currently make it easier for banks to lend if they can find credit-worthy customers.

1. A currency board requires a nation to have reserves of the anchor currency equivalent to each unit of local currency they issue at the pegged rate. However the national government in the particular country is still the monopoly issuer of its own currency.

Answer: True

2. A nation that runs a currency board has to seek ways to ensure exports exceed imports to avoid a future of domestic stagnation because the monetary base has to shrink every time net exports are negative.

Answer: True

3. It is clear that an open market purchase by the central bank in the secondary bond markets gives the private sector more cash which means the monetary base expands if nothing else happens.

Answer: True

Explanation: Please see The complacent students sit and listen to some of that for more information or post a comment.

4. The Reserve Bank of Australia currently seeks to maintain a policy interest rate of 3.75 per cent as its statement of monetary policy. As a consequence, unless it was prepared to pay the same rate on overnight reserves held with it by the commercial banks, then any government net spending has to be offset with debt-issuance.

Answer: True

Explanation: Please see The complacent students sit and listen to some of that for more information or post a comment.

5. There are millions of idle dollars sitting in bank reserve accounts at present as a result of the so-called central bank liquidity operations. While bank loans create deposits and the banks then add necessary reserves as part of a separate operation, it is clear that the huge stock of idle reserves, currently make it easier for banks to lend if they can find credit-worthy customers.

Answer: False

Explanation: Please see Its a hard road for more information or post a comment.