The paper combines elements of a historical essay with a review of literature on exchange rate regimes, liberalization of capital flows and causes of currency crises. It also includes the author's vision the future evolution of monetary policy regimes under continued globalization. The key question is whether independent monetary policy at a national level is possible in the world of increasingly unrestricted international trade, integrating financial markets and growing cross-border capital mobility. More and more economies are running up against the dilemma. Those particularly affected are the developing countries and the former Eastern Bloc countries now under transformation. Frequent instances of currency crises in these countries in the past decade confirm the materiality and current weight of the issue.

The author's intention was not to provide a full comparative analysis of all possible monetary and exchange rate regimes and their economic impact. Such an extensive analysis would definitely lie outside the paper's scope. The objective was rather to review the most important factors which determined the evolution of those regimes in the 20th century. The author then highlights the new circumstances arising in the past twenty years from the advancing globalization. These new circumstances call for a reconsideration of the role of monetary policy and the degree to which it can be determined nationally. Against this backdrop, the author attempts to predict the evolution of monetary policy regimes. He also deals with potential problems resulting from any further integration at supranational level or changes in the operation of institutions in charge of monetary policy. The vision is understandably subjective, and reflects the author's perception of the realities of contemporary macroeconomic policy. It is an invitation to a debate of the dilemmas most countries will have to face in the coming decade, Poland and other countries of our region being amongst them.

The structure of the paper is as follows: Chapter 2 deals with the impossibility, under fully liberalized capital flows, to conduct active monetary and exchange rate policy simultaneously. Chapter 3 provides an analysis of the benefits and costs of globalization, while Chapter 4 sets out to determine how irreversible the process is. Chapter 6 evaluates the weaknesses of intermediate monetary policy regimes, i.e. regimes which strive to reconcile the elements of active money supply policies with exchange rate policies. Chapter 7 compares two extreme regimes: that of a fully flexible exchange rate and the currency union. The latter deserves particular attention in the light of the current macroeconomic and political developments.