CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

The main reason for dollarization is ______
A. to improve the credit-worthiness of the central bank.
B. greater stability in the value of the foreign currency over the domestic currency.
C. to follow the foreign country's monetary policy.
Explanation: The downside is that the country gives up its right to influence its own monetary policy by adjusting the money supply.

User Contributed Comments 1

User Comment
kritan remember: dollarization is not the REPLACEMENT of the domestic currency with dollars, but the use of it in PARALLEL with the domestic currency.
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