|Poland's central bank|
COURTESY OF NBP
Poland's Ministry of Finance has published its proposals for amendments to the law on the National Bank of Poland, including allowing the central bank to buy and sell treasury bonds outside open market operations.
Economists said that the ministry is most likely trying to secure a buyer in the case of a sell-off of Polish bonds by foreign investors, disallowing yields to rocket as a result. This is a sensible idea, ING Bank ¦l±ski economist Rafał Benecki told business daily Puls Biznesu. The government should, however, set clear rules so as not to limit the autonomy of the NBP, he added.
“Potentially enabling the NBP to act as a lender of last resort would be a correct move, in our view, that would reduce tail risks in Poland, especially in extreme scenarios of large outflows of capital from EM markets,” Citi economists wrote in an e-mailed comment. “However, the Polish constitution does not allow the central bank to provide funding to the government and therefore any changes in law would need to be made in a way that clarifies doubts about central bank’s independence,” they added.
In his interview for the Obserwator Finansowy website, NBP president Marek Belka said that the proposed change is a “technical issue.” The central bank should be allowed to buy and sell securities on the secondary market in order to regulate the financial sector's stability and liquidity, he explained.
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