Press release of the NBP Press Office
In July 2013 the President of NBP requested the Minister of Internal Affairs for a meeting in order to discuss issues relating to the security of cash transactions, in particular, the modernisation of security features of banknotes for general circulation by the Polish Security Printing Works (PWPW), and to inform about the tender for the production of 1, 2 and 5 groszy general circulation coins.
During the private part of the conversation Marek Belka informed Bartłomiej Sienkiewicz about the lack of cooperation on the part of the Minister of Finance on issues which are, in NBP’s opinion, of crucial importance for Poland’s financial stability (Act on the Systemic Risk Council introducing amendments in the Act on NBP) and NBP’s possible support for the national financial system in the event of a turmoil in the financial markets, which NBP already provided at the beginning of the financial crisis, and as other central banks in the world continue to extend.
The President of NBP is of the opinion that the absence of legislation on the Systemic Risk Council, and amendments in the Act on NBP weakens Poland’s financial resilience in the event of a possible future financial crisis.
The conversation lasted almost two hours; however, only several-minute-long fragments taken out of context have been published, discussing the stability of the financial system, which – through manipulation – have been presented as the President of NBP’s abuse of power, which has never taken place.
The President of NBP expresses his deep regret for the language used during this private conversation and apologizes to all who might have been hurt or offended.
The Press Office of NBP informs that the substantive aspects of the conversation of Marek Belka and Bartłomiej Sienkiewicz of July 2013 were repeatedly discussed in public during press conferences, interviews and commentaries of the President of Narodowy Bank Polski as well as in NBP reports, press releases and analyses.
Additional information relating to particular questions discussed during the conversation can be found below:
1. Intervention of central banks in the treasury securities market:
The Minister of Finance Jacek Rostowski discussed this issue in public at the beginning of 2012, pointing to the possibility of NBP intervention in the treasury securities market. NBP published at that time a press release which is available on the bank’s website:
Central banks’ intervention in the treasury securities markets is not now an extraordinary procedure. After the outbreak of the financial crisis in 2008 it has become a common practice in, for example, the United States, Japan and the euro area.
Treasury securities purchases by central banks are not necessarily the equivalent of financing the budget deficit. For example, NBP purchased treasury securities in order to provide commercial banks with liquidity immediately after the outbreak of the 2008 crisis. On the other hand, in recent years in the euro area, in a situation of robust growth of treasury securities yields, the central bank intervened in the interests of ensuring financial stability.
On 13 April 2014 in Washington, the President of NBP said that NBP is preparing non-standard monetary policy instruments. He stressed that the central bank is not planning to use them, but is preparing them should the intervention be necessary.
NBP also did not post a profit in 2013 (NBP’s financial result was zero), which means that the bank did not contribute to the state budget this year (95% of profits go directly to the state budget).
2. Minister of Finance Jacek Rostowski’s attitude to Narodowy Bank Polski and the Monetary Policy Council.
In the first half of 2013 the Minister of Finance blamed NBP and the MPC for slowing down economic growth and the poor condition of the state budget and pressed for a rapid reduction of interest rates. The central bank did not react at that time to this pressure.
There was also a lack of agreement between the Ministry of Finance and NBP on changes in the legislation on the creation of the Systemic Risk Council and the amendments to the Act on NBP, which NBP was calling for.
The draft framework of the Act on NBP that was published by the Ministry of Finance was discussed by the President of NBP, among others, during the interview that he gave to Obserwator Finansowy in August 2013:
3. Creation of the Systemic Risk Council
In July 2012 the President of Narodowy Bank Polski announced in the Sejm the creation of the Systemic Risk Council that Poland is obliged to establish under the EU regulations. In accordance with the regulations, the Systemic Risk Council should have started functioning in Poland in the middle of 2013.
The Act on the Systemic Risk Council has not been passed yet.
4. The question of “domestication” of banks in Poland, was repeatedly discussed by the President of NBP, among others, during the press conference after the meeting of the Monetary Policy Council in November 2011:
5. Forecasts of economic developments in Poland are in line with the “Inflation Report” and GDP and inflation forecasts of July 2013.
6. The issue of production costs of 1, 2 and 5 groszy coins was presented in the following NBP press releases: