The paper investigates the potential effects of euro adoption on the Polish economy. It analyses how a replacement of the national currency -zloty, and therefore an elimination of a real exchange rate, affects output fluctuations. In the paper, we develop a utility-based theoretical framework to provide a metric for judgment of alternative monetary policies; identify and estimate the sources of aggregate fluctuations; and calibrate the model's structural parameters to Polish economy. Our results show that the real exchange rate did in fact serve as an external shock absorber in Poland in 1990-2012. Its elimination should be interpreted as a cost of euro adoption to the national economy.