| On 14 October 2008, Sławomir Skrzypek, President of the National Bank of Poland, held a meeting with representatives of the Polish banking sector, in the presence of members of the Monetary Policy Council and members of the NBP Management Board. The meeting participants unanimously agreed that the Polish banking system is safe and stable, but there is a need to boost confidence in the interbank market through expanding the range of monetary policy instruments. Mr. Skrzypek discussed the measures the National Bank of Poland plans to take in order to restore smooth functioning of the markets. The measures are included in the so-called "Confidence Package" and will focus on accomplishing three practical goals: - providing banks with the zloty for periods longer than one day,
- providing banks with foreign currencies,
- expanding the possibilities for banks to obtain liquidity in zloty by broadening the range of collateral in operations with the NBP.
The NBP plans to take the following steps to accomplish these goals: - a. performing liquidity-providing open market operations in the form of repo transactions, with maturities of up to three months,
- b. introducing FX swaps,
- c. introducing FX deposits as collateral in refinancing credits,
- d. introducing modifications in the operational system of Lombard credits, comprising:
- decreasing a "haircut" when determining the value level of Lombard credit collateral
- expanding the range of assets that may serve as collateral of a Lombard credit with the NBP
- e. maintaining issuance of seven-day NBP bills as the main excess liquidity absorbing instrument,
- f. increasing, if necessary, the frequency of open market operations to enable flexible response to changes in liquidity, and to stabilise the POLONIA rate around the reference rate.
At the same time, the National Bank of Poland reminded the banks of the possibility of redemption of NBP bills before their maturity. Meetings of the representatives of the NBP, the MPC and commercial banks will continue. |