The currency band is a system of exchange rates by which a floating currency is backed by hard money.
A country selects a range, or "band", of values at which to set their currency, and returns to a fixed exchange rates 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 themainland of thePeople's Replubic of China has recently been based upon a currency band; theEuropean Economic Community' "snake in the tunnel" was a similar concept that failed, but ultimately led to the establishment of the ERM and ultimately the Euro.