ABSTRACT
This chapter examines the role of exchange rate policy in the Polish economic transformation from 1989 to 1996. Some of Poland's troubles were the fault of poor policies in previous decades. Inflation in Poland accelerated in 1987 and 1988 as a result of substantial rises in officially controlled prices and compensating increases in wages, along with soft financing of the economy. The initial exchange rate adopted by the National Bank of Poland was aimed at curbing inflation. In October 1991 Poland introduced a preannounced crawling peg. In 1993-1994, the European Union countries' share in Poland's imports and exports exceeded 60 percent; trade with the countries of Central and Eastern Europe and with the former Soviet Union stabilized. In order to reduce the rate of increase in official reserves, the National Bank of Poland considered allowing exporters to open foreign currency accounts and lowering the import tax.
