This article is an attempt to analyze the National Bank of Poland (NBP) experience within the monetary policy pursued in 1993-1997, and to assess to what extent this experience may be helpful in terms of problems facing the monetary and exchange rate policies in the next five years, i.e. up to 2003.

The article is not limited to the presentation of the policy itself, prerequisites of decisions, and the system of their achievement only, but it also tries to describe the philosophy of the policy resulting mainly from conditions in which the policy has been pursued. The author claims that without a detailed analysis of such conditions it is impossible to explain the way of the NBP policy pursuit in 1993-1997.

The article begins with the analysis of internal and external conditions of the monetary policy and related impact on the selection of strategies. Then it analyses the monetary policy performance in certain periods. Time breakdown applied by the author considers types of major challenges facing the National Bank of Poland those days. Further it summarizes NBP policy effects in 1993-1997 against the background of effects present in other Central European states (Hungary, Czech Republic). Finally, the author attempts to analyze challenges facing the monetary policy up to 2003, and possibilities to use previous experience to solve future problems.

Contrary to other papers on the monetary policy in Poland during transformation, the author believes that NBP did not followed at all the strategy of money supply control since under the Polish conditions an effective control of the aggregate was impossible. NBP strategy is called by the author "eclectic" - being a compilation of elements derived from different monetary policy strategies - oriented, in particular, to the stability of the disinflationary process. The stability of the process was to provide for a smooth adjustment of inflationary expectations. A condition for a continuous disinflation was to preserve a safe level of the internal balance, on which NBP focused in particular.

According to the author, the adoption of existing direct inflation targeting framework was of an evolutionary rather than revolutionary nature.

The author comes to two conclusions for the future. First, the government should take more responsibility for the exchange rate policy which is associated with the fact that major part of the capital inflow into Poland will be derived in the future from sources affected by the central bank instruments. Second, it is controversial to conclude that in countries where an excessive capital inflow from such sources is problematic for the monetary policy, the policy needs not to be pursued in a transparent manner. It should only increase the risk of portfolio investment.