BAFT Certificate in Principles of Payments (CertPAY) Practice Test

Question: 1 / 975

Which currency is commonly used as a peg by several countries today?

The euro

The Japanese yen

The US dollar

The US dollar is commonly used as a peg by several countries today due to its status as the world's primary reserve currency. Many nations adopt a peg to the US dollar to stabilize their own currency and limit volatility in exchange rates. This practice helps foster trade relations and ensures economic stability, as the US dollar is widely accepted and trusted globally. Countries that peg their currency to the US dollar often do so to import the credibility and economic strength that the dollar represents, which can aid in controlling inflation and attracting foreign investment.

In contrast, while the euro, Japanese yen, and British pound are significant currencies, they are not as prevalently used for pegging purposes on a global scale. The US dollar's dominance in international trade and finance further solidifies its role as the preferred choice for currency pegs.

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The British pound

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