Currency

Currency

The currency band is a system of exchange rates by which a floating currency is backed by hard money. A country selects a range band of values at which to set their currency and returns 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 value within the band. In this sense it is a compromise between a fixed exchange rate and a floating exchange rate. Like when the exchange rate of the reminder of the mainland of the Peoples Republic of China has recently been based upon a currency band the European Economic Communities snake in the tunnel was a similar concept that failed.