Originally called the ‘snake in the tunnel’ principle. Methods adopted by the European Economic Community to control day-to-day fluctuations in the rates of exchange of member currencies against the dollar. It was a somewhat unsteady concept but, basically, it was agreed that rates would be able to vary to within 2 ¼ per cent on either side of the dollar without interference by the central banks. It was also agreed that 2 ¼ per cent should be the maximum difference between the strongest and the weakest of the E.E.C. currencies and that, within this limit, the currencies could be allowed to wander freely or to ‘snake’. In 1979 the Snake was replaced by the European Monetary System.
Reference: The Penguin Business Dictionary, 3rd edt.