The paper opens a review of exchange rate policy options available to Poland on its way to the Economic and Monetary Union. A wide range of possible solutions can be applied both before country joins the European Union and at the membership stage. The choice of a specific regime at either stage should be determined by the general objectives and circumstances of economic policy as well as the targeted time of the country's accession to the Economic and Monetary Union. The latter in turn defines the deadline by which the currency must reach required stability. However, the prescribed degree of stability can be attained under various regimes, within ERM 2 or outside the system. Therefore the date of Poland's accession to the European Union does not substantially affect the choice of exchange rate policy.

With the leeway this affords policymakers, they will have to carefully consider the changes to the system to be introduced both at the pre-accession and membership stage in order to ensure the smoothest path into the EMU, i.e. a transition at a low cost and limited risk of a failure.

To do this, it is necessary to overview the options, ranging from currency board to a clean float. The overview reveals substantial weaknesses of the fixed regimes, above all their vulnerability to speculative attacks and the exclusion of independent economic policy. Under those regimes, a fairly stable economy in a growth phase may also experience problems in curbing inflation, which is particularly dangerous to the countries aspiring to the EMU. The benefits of a fixed exchange rate regime such as "borrowing" the stability of the reference currency may prove doubtful or downright illusory. Thus it would seem a mistake to fix the exchange rate beyond the extent formally required by EMU and ahead of the prescribed schedule.

However, in order to join the EMU it will be necessary to stabilise the currency rate at a level close to the declared parity. The paper proposes a plan envisaging a gradual reduction in the exchange rate volatility, starting from a wide band of fluctuations, through a narrower "soft" band, and ending - most likely - with the narrow and rigid band of the ERM 2 system. This should result in the emergence of a credible and sustainable central rate. The credibility, however, will depend on how accurately this rate is determined. This may prove difficult, as the short-term exchange rate is heavily affected by certain temporary processes.