Currency Board

An independent monetary authority that substitutes for a central bank. The currency board pegs the value of the domestic currency, and changes in the foreign reserve holdings of the currency board determine the level of the domestic monetary stock.

For example, Bulgaria established a currency board pegged to the Deutsche mark (and currently to the Euro) in 1997. The Bulgarian National Bank (BNB) is required to have sufficient foreign exchange and gold assets at all times to cover all liabilities in full. Furthermore, Bulgaria's currency board has a legal basis which is written into the BNB's law.