A currency band is a range of values for the exchange rate for a country’s currency which the country’s

central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central b ...

acts to keep the exchange rate within. The central bank selects a range, or "band", of values at which to set their currency, and will intervene in the market or return to a fixed exchange rate if the value of their currency shifts outside this band. This allows for some revaluation, but tends to stabilize the currency's value within the band. In this sense, it is a compromise between a fixed (or "pegged") exchange rate and a floating exchange rate. For example, the exchange rate of the '' renminbi'' of the

mainland Mainland is defined as "relating to or forming the main part of a country or continent, not including the islands around it egardless of status under territorial jurisdiction by an entity" The term is often politically, economically and/or dem ...

of the

People's Republic of China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...

has been based upon a currency band;''China Vows Wider Yuan Movement''
April 18, 2013 Wall Street Journal the European Economic Community's "

snake in the tunnel The snake in the tunnel was a system of European monetary cooperation in the 1970s which aimed at limiting fluctuations between different European currencies. It was the first attempt at European monetary cooperation. It attempted to create a sing ...

" was a similar concept that failed, but ultimately led to the establishment of the

European Exchange Rate Mechanism The European Exchange Rate Mechanism (ERM II) is a system introduced by the European Economic Community on 1 January 1999 alongside the introduction of a single currency, the euro (replacing ERM 1 and the euro's predecessor, the ECU) as ...

(ERM) and ultimately the

Euro The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...

References

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Band Band or BAND may refer to: Places *Bánd, a village in Hungary *Band, Iran, a village in Urmia County, West Azerbaijan Province, Iran * Band, Mureș, a commune in Romania *Band-e Majid Khan, a village in Bukan County, West Azerbaijan Province, I ...

Foreign exchange market

See also

References