The paper reviews the Finnish experience of maintaining an explicit currency band since its creation in 1977. The emphasis is on the latter half of the 1980s, which is a period of free capital movements and unregulated domestic money markets. The first part of the paper gives an historical...

The paper attempts to formalize dealer behaviour in the foreign exchange market. The three key assumptions used in the analysis are price sensitivity of customer orders and profit maximization by dealers who are constrained by the closed position target for the end of the day. As a market maker...

This paper examines developments in the Finnish money and foreign exchange markets in the light of the recent literature on target-zones. The basket-pegging system, which was officially adopted in Finland in late 1977, provides a good opportunity to discuss some of the implications of the...