Kołodko - ERM-2 in 2004, euro zone in 2007

Finance Minister Grzegorz Kołodko said yesterday that Poland could join the euro zone in 2007 and tie the złoty at 4.4-4.5 to the common currency, or 3%-5% below its present value. Hours before ten candidates were to sign the European Union Accession Treaty, Kołodko said that Poland should join the exchange rate mechanism (ERM-2), a precondition for adopting the euro, when it enters the bloc in May 2004. Before any candidate joins the euro zone, it has to spend two years in the ERM-2, a currency stabilization mechanism allowing the exchange rate to fluctuate no more than 15% either side of a central parity rate to the euro. "If I were to the take the decision now [on fixing the złoty/euro exchange rate], I would opt for 4.35. But in three or four years, the exchange rate could be weaker due to inflationary processes," he said. (Reuters) M.M.