How did the currency board introduced by Ivan Kostov’s government help reduce inflation?

The currency board introduced by the government of Ivan Kostov in 1997 helped reduce inflation by serving as an institution dedicated to reinforcing a fixed exchange rate and maintaining a monetary policy that defends that rate.12

By tying the national currency (the lev) to a stable foreign currency—initially the German mark—the currency board imposed strict financial discipline on the economy. This mechanism effectively limited the government's ability to manipulate the money supply, which had previously contributed to hyperinflation, and provided the stability necessary to restore confidence in the financial system. As a result of these reforms, annual inflation was dramatically lowered by the end of the decade.3412