ABSTRACT
This chapter deals with some new monetary, fiscal and exchange rate policy considerations. It also deals with the fiscal and financial costs and benefits of unilateral euroization. Developments in Poland suggest that monetary policy can be used effectively to reduce the current account deficit. The traditional path to EU and EMU accession either exposes fast growing applicant countries to a high risk of currency crisis, or forces them to grow far more slowly than they could with unilateral euroization. Wojcik worries about exchange rate misalignment as a result of inflationary inertia after the domestic currency is converted into euro. The stock seigniorage cost of adopting a foreign currency results from the need to exchange the existing stock of domestic currency notes and coins for foreign notes and coins. The chapter concludes with some of the legal and political aspects of European Union (EU) opposition to unilateral euroization.
