Moreover, the delays in the restructuring or privatisation of state-owned companies paved the way for high levels of arrears. Acting as surrogate money, they undermined monetary policy restrictiveness and fuelled inflation. In addition, the disequilibria manifest at the level of the current account could be adjusted only by purposely resorting to the exchange rate, whose depreciation generated inflation as well. As a matter of fact, other countries which, during one transition stage or another, had slowed down the engines of economic restructuring were also faced with such issues, recording a more modest macroeconomic performance. Going back to the comparison with Poland, I deem it relevant that the output loss associated with the structural changes implied by the transition to a market economy was fully recovered in 1995 in Poland, whereas in Romania this occurred a hefty nine years later. Now, it is almost two decades since Romania – EU accession negotiations had been opened. Back then, in 2000, I served as prime-minister. In fact, I think I may say that my entire prime2/5  BIS central bankers' speeches  ministership in 2000 was dedicated to laying the groundwork for Romania’s accession to the European Union. And it is worth noting that, if Romania managed to join the EU on 1 January 2007, all the inherent stumbles notwithstanding, the preparation process started in 2000 was essential. And it would have been dramatic if this start had been missed.
As a consequence, products manufactured in these countries become more expensive and such countries loose competitiveness (e.g. Estrada, Lopez-Salido 2001). It is relatively difficult to foresee how the Polish economy will react to demand pressures once in the euro area. However, as in the case of asymmetric shocks, labor market flexibility is probably the best answer to the described phenomena. It allows a smooth and relatively painless adjustment if the economy looses competitiveness. Summing up, I have discussed selected aspects of the cost-benefit analysis of Poland’s adoption of the euro, with a special focus on issues which are less familiar to the general public. As I argued, some costs will materialize if asymmetric shocks hit the enlarged eurozone. We do not know the likelihood of such shocks though, so it is impossible to calculate the expected value of costs related to these events. We know, however, that the probability of asymmetric shocks declines with rising similarity or progressing real convergence of the EU economies. Let me also stress that the magnitude of costs depends crucially on domestic policy – prudent banking sector supervision, labor market reforms and sound fiscal policies to name a few. Adoption of proper policies reduces future potential costs related to euro-zone membership and, at the same time, enhances future benefits. In my view, given the evidence that reforms have been halted in many countries after entering the eurozone, these measures should be taken before the euro area accession. Thank you for your attention. References: 1. Borowski J. 2003.