Poland and the euro zone enlargement: Monetary policy,ERM II,and other issues

In this paper, Poland's preparations to introduce the euro and discussions surrounding them are briefly analyzed. Its first part deals with legal and macroeconomic developments before Poland's accession to the EU in May 2004. The second part considers Poland's official position and possible future scenarios. The main conclusions are twofold. Firstly, it is argued that after finishing successfully the disinflation process, Poland's monetary integration is above all subject to fiscal and exchange rate developments. In both cases, they are a function of the economy's structural changes. Secondly, as a consequence, fulfilling the Maastricht Treaty nominal convergence criteria by Poland will imply enough degree of real convergence for its successful participation in the euro zone. The opinions expressed in the paper are of the author and should not be attributed to any institution he is working for. He would like to expresshis gratitude to Witold Grostal and Robert Woreta for providing the graphs. Helpful comments were made by Michal Brzoza-Brzezina, Tomasz Chmielewski, and by Eduard Hochreiter. Language assistance was provided by Barton D. Raven. Any remaining errors are solely the author's responsibility.