A currency board is a monetary authority that issues a country's currency and maintains its value by tying it to a foreign currency, usually a stable one like the U.S. dollar or the Euro. This system ensures that the amount of local currency in circulation is backed by foreign reserves, promoting stability and confidence in the currency. Currency boards limit the ability of a government to print money, as they must hold sufficient foreign reserves to cover the local currency issued. This arrangement can help control inflation and foster economic stability, making it an attractive option for countries with a history of monetary instability.