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. Although the costs may seem substantial, one has to bear in mind two things. First, the probability that these costs will have to be incurred is relatively low. Second, their magnitude depends crucially on domestic policy – prudent banking sector supervision, labor market reforms and sound fiscal policies to name a few. 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: Borowski J. 2003. “Potential Benefits of Poland’s EMU Accession”, Focus on Transition No. 1. Brzoza-Brzezina, M. 2005. “Lending Booms in the New EU Member States: Will Euro Adoption Matter?”, ECB Working Paper No 543, European Central Bank, Frankfurt. BIS Review 6/2007  3  Brzoza-Brzezina, M. 2006. “The Information Content of the Neutral Rate of Interest: The Case of Poland”, Economics of Transition 14(2), s. 391-412. Csajbók, A., Csermely, A. (ed.) 2002. “Adopting the euro in Hungary: expected benefits, costs and timing”, MNB Occasional Paper 24, National Bank of Hungary DeGrauwe, P. 2003. “The Enlarged Eurozone: Can it Survive?”, Jelle Zijlstra Lecture, NIAS. Demirgüç-Kunt, A., Detragiache, E. 1998. “The Determinants of Banking Crises in Developing and Developed Countries”, IMF Staff Papers, Vol. 45, No. 1, Washington, D.C. Eickmeier, S., Breitung, J. 2005.
51, No. 4, s. 657-665. Schadler, S., Drummond, P.F.N., Kuijs, L., Murgasova, Z., Elkan van, R. 2005. “Adopting the euro in Central Europe: Challenges of the Next Step in European Integration”, Occasional Paper No. 234, International Monetary Fund, Washington. Wicksell, K. 1898. “Interest and Prices”, tłum. R.F.Kahn, MacMillan, New York, 1936. Woodford, M. 2003. “Interest and Prices”, Princeton University Press, Princeton and Oxford. 4  BIS Review 6/2007