Which statement best contrasts central bank roles in fiat currency systems versus commodity-backed systems?

Which statement best contrasts central bank roles in fiat currency systems versus commodity-backed systems?

• A. In fiat systems, central banks focus solely on issuing currency, while in commodity-backed systems monetary policy governs inflation.
• B. In fiat systems, central banks manage monetary policy and currency issuance; in commodity-backed systems, money supply is tied to a commodity, limiting policy flexibility.
• C. In fiat systems, central banks fix exchange rates; in commodity-backed systems, exchange rates float freely.
• D. In fiat systems, central banks do not manage monetary policy; in commodity-backed systems, they handle fiscal policy.

Answer: (B)