ABSTRACT
The debate on the costs and benefits of adoption of the euro in Poland can be divided into three phases. The first phase started before the enlargement of the European Union. It was characterized by euro enthusiasm stemming from the belief that introduction of the common European currency can spur economic growth and speed up real convergence. The outbreak of global financial crisis and concomitant massive złoty exchange rate depreciation gave rise to the second phase. The conclusion that can be drawn from that phase is that the shield provided to the Polish economy by the floating złoty exchange rate is less effective than it was two decades ago. The third phase began with the outbreak of the coronavirus (COVID-19) pandemic which put monetary policy on the brink of an effective lower bound for interest rates and prompted the National Bank of Poland to purchase government securities and government-guaranteed debt securities. International experience suggests that Poland, as a small open economy, is likely to face the problem of diminishing marginal impact of asset purchases on aggregate demand. If further research corroborates this conclusion, it would point to the diminishing long-term cost of monetary integration and likely positive welfare effects of adoption of the euro in Poland.
