A currency peg is a monetary policy in which a country's government or central bank ties the value of its currency to another major currency, like the U.S. dollar or the Euro. This means that the pegged currency's exchange rate is fixed, providing stability and predictability in international trade and investment. By maintaining a currency peg, a country can help control inflation and stabilize its economy. However, it also requires the central bank to hold large reserves of the foreign currency to manage fluctuations and maintain the peg, which can be challenging during economic crises.