The article describes method for using smoothing technique to estimate the term structure of interest rates in money market. We use B-spline technique, proposed earlier by many authors for term structure of interest rates in bond market, to incorporate different shapes of estimated curve. Because our main focus is to receive stable forward curve of interest rates, B-spline technique together with "roughness penalty" method, appears to be the more appropriate. Finally we show estimation results for Polish money market, indicating that above technique has ability to produce flexible and stable forward curve.