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For example, Belize has pegged its currency to the US dollar at an exchange rate of 2 Belize dollars to 1 US dollar. How does Belize do that?

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  • $\begingroup$ Welcome to Economics:SE. Thank you for your question; please consider revising it to be more in line with our community expectations. Like many other stacks, we expect questions to provide evidence of prior research. That helps us to understand the question, and avoids our repeating work you've already done. Our help center, and other stacks provide additional resources to assist with revisions. $\endgroup$ – 1muflon1 Mar 8 at 22:21
  • $\begingroup$ If you look over history, currency pegs of various types were the norm, e.g., the Bretton Woods system, Gold Standard, and then the euro and its predecessors (ERM). Each one has its own institutions. If you are interested in Belize in particular, you might as well start searching on your own, with the central bank being a likely source of information. $\endgroup$ – Brian Romanchuk Mar 9 at 23:27
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Central bank of the country just declares that it will exchange local money for the foreign money at fixed exchange rate. You can just look up definition of currency peg.

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  • $\begingroup$ Belize operates exchange controls so it is not quite as simple as that $\endgroup$ – Henry Mar 8 at 23:33
  • $\begingroup$ Right; if lots of people convert their B\$ into US\$ then the central bank will run out of US\$, so the central bank limits this transaction. $\endgroup$ – Daniel Mar 14 at 15:58

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