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180 years of central banking in Poland

The origins of central banking in Poland - as in many European countries - go back to the first decades of the XIX century. The first Polish issuing bank was the Bank of Poland established in 1828 in the Kingdom of Poland. It was a state bank, with its share capital coming from governmental funds. It performed issuing tasks (zloty-denominated bank notes exchangeable for silver coins), operated as the bank of the state (servicing public debt, keeping public institutions' deposits and funds), and functioned as a credit and deposit bank providing support for the development of the state industry and infrastructure. In 1870 its issuing privileges were taken away by the Russian authorities and consequently, in 1886, the Bank of Poland went into liquidation. The bank's assets and branches were taken over by the Russian State Bank.

In the twentieth century four different institutions, one by one, performed the tasks of the issuing bank in Poland: the Polish National Loan Office, the Bank of Poland, the Issuing Bank in Poland and the National Bank of Poland.

The Polish National Loan Office (1917-1924) issued currency, performed credit, deposit, as well as remittance operations. At the end of 1923, extensive lending activity, and extending loans to the state through new issues of the Polish mark in particular, led to the most destructive hyperinflation in the history of Poland. The Bank of Poland was established in 1924 as a joint stock company with mixed ownership, which was supposed to guarantee the bank's autonomy in relations with the government. The most important body was the Bank Council representing its shareholders. The main task of the Bank of Poland was to maintain the stability of the zloty. The institution combined the duties of an issuing bank (issuing zloty-denominated bank notes in accordance with the Gold Exchange Standard), the bank of the state and a commercial bank. It gave loans to banks and directly to the business sector, applying discount and lombard rates, restricting credits and checking bills of exchange. It performed particular tasks for the State Treasury (operating accounts free of charge, no-interest credits up to a statutory amount). The activity of the bank was, however, interrupted by the war. The bank administration was evacuated to London, together with the most valuable documents, gold reserves and foreign currencies. In the General Government, the German authorities set up the Issuing Bank in Poland.

In January 1945, the National Bank of Poland was established. The Issuing Bank in Poland was closed and the issuance privileges of the Bank of Poland were waived (the bank was liquidated in 1951). The NBP combined the tasks of a central banking institution with those of a state organization cooperating with the state administrative bodies towards the realization of the monetary and credit policy, whose direct goals were set up by the Ministry of Finance. The NBP's position in the financial and economic system of the People's Republic of Poland was far from that of a typical central bank in a market economy.

After the change of political system in 1989, the status and tasks of the NBP were significantly transformed. The main goal of the NBP was to strengthen the Polish currency. Transformation into a two-tier banking system was fundamental for the introduction of monetary policy instruments typical for market economies. The NBP is an issuing bank, a banks' bank and a bank of the state. As an issuing bank, it has the exclusive right to issue notes and coins of the Republic of Poland. As a banks' bank it determines the rules of the banks' refinancing, decides on the interest rates policy and the reserve requirement. This way it helps to shape the economic policy of Poland. As a bank of the state, the NBP provides cash-settlement services to the central budget units and performs other statutory defined duties, however, it cannot grant credits to the State Treasury. The National Bank of Poland enjoys a high degree of autonomy.

Since 1997, the Monetary Policy Council has been the NBP's main body responsible for realization of NBP's fundamental tasks.

Cecylia Leszczyńska, Ph.D.
Warsaw University