Stabilizing effects of the band of admissible exchange rate fluctuations. Poland's experience of 1995�-2000

The objective of the paper is examination of the stabilizing effects of the system of creeping band of admissible exchange rate fluctuation that was in force in Poland in 1995-2000. According to the theory created by P. Krugman, such a system, if considered reliable by the participants of financial markets, can, by keeping the exchange rate expectations on the desired level, make a factor widening the degree of autonomy of the monetary policy, with simultaneous fulfilment of the existing exchange rate obligations. The empirical analysis made and the adduced instances of cases in which the so-called stabilizing speculation has played a beneficial role permit to state that, especially in the second part of the period in question, the stabilizing effect of the band of admissible exchange rate fluctuations, together with the increased floating of the zloty, constituted an important element that enabled the National Bank of Poland to maintain a partial freedom in the conduct of monetary policy in the face of the steadily growing capital mobility.