NBP straż macroeconomic stability of Poland what contributions to the budget
The ancient Romans used to say Si Vis Pacem, para Bellum – that is, if you want peace, prepare for war. This Latin proverb, however, describes not only the basic doctrine of the art of war, but also the principle that illuminates the anti-crisis activities of the National Bank of Poland. Because we never know exactly when and in what form the next crisis will materialize-that is why we are constantly preparing for the next economic battle, taking care of the solid foundations of the Polish economy and the strong financial position of the central bank. Thanks to this attitude, Poland entered the elite league of economies, which not only survived relatively well the global financial crisis of 2007-2012 and the COVID-19 pandemic, but also creatively used both of these challenges to increase their potential.
As much as 43.3 billion rubles-so much NBP paid to the state budget in 2016-2022
One of the areas of activity of NBP, in which this promotion materialized, is the management of foreign exchange reserves. Their value has already exceeded EUR 144 billion, almost doubling over the last decade. This is extremely important, since the reserve assets ensure the solvency of the Polish state, including indirectly the private sector. Despite unfavourable global conditions, the Polish central bank is achieving very good investment results. The sum of the contributions from the NBP profit to the state budget made in 2016-2022 amounts to PLN 43.3 billion.
230 tons of gold guarantees the safety of Poland and Poles
One of the pillars of NBP’s investment strategy is the successive increase in gold reserves, which as a safe haven asset effectively diversifies the risks associated with other investments. In 2018-2019, the central bank purchased 125 tons of gold, increasing its resource to nearly 230 tons, which corresponds to about 8 percent. reserve assets of NBP.
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Macroeconomic stability and a large stock of reserves proved invaluable when, just two years after the outbreak of the pandemic, Poland had to face another crisis – this time with a geopolitical basis. Russia’s military aggression against Ukraine has caused a humanitarian and political-economic catastrophe, the full scale of which is not even known today. The mass exodus of civilians, disruptions in supply chains, restrictions on the supply of energy and food, as well as turmoil in financial markets and a strong increase in risk aversion are just a few of the challenges the world will face.
Free access to cash thanks to NBP’s strategic preparedness
In the first days of the war, many Poles watching what is happening across our eastern border were concerned about the uncertainty of tomorrow, which in turn was reflected in a strong, rapid increase in the demand for cash. The central bank was well prepared for this circumstance thanks to the NBP’s national strategy for the safety of cash circulation. As a result, NBP had sufficient stocks to fully cover the demand of bank customers for cash. All orders of banks were executed without limits of value, in full nominal structure, throughout the country, which allowed quickly to control panic.
High level of reserves allows you to act in extraordinary times
Thanks to the policy of successive accumulation of reserve assets, the NBP had an adequate level of reserves at the threshold of the crisis and had an appropriate set of instruments to counter negative trends in the financial and foreign exchange markets. In particular, it was ready at any time to react to excessive fluctuations in the gold exchange rate, which could disrupt the smooth functioning of the foreign exchange and financial markets or adversely affect financial stability or the effectiveness of the NBP’s monetary policy.
NBP takes care of Polish economy and supports Ukraine
High level of reserves allowed NBP to provide the National Bank of Ukraine swap line on the pair US dollar/Hryvnia to the amount of $ 1 billion. These measures are intended to reduce the risk of further destabilisation of Ukraine’s political and economic situation, which would have a negative impact on the stability of the financial system in Poland as well.
In addition to the economic dimension, the crisis also has a dramatic humanitarian dimension, one of the manifestations of which is the flight of millions of people from the bombing of Russian forces. Many representatives of the brave Ukrainian nation found refuge in Poland. These people often came with cash exported from Ukraine in Hryvnia, which they could not easily exchange for gold. The National Bank of Poland has signed an agreement with the National Bank of Ukraine, which allows each adult refugee from Ukraine to exchange the hryvnia (up to 10 000 Hryvnia) for Polish zloty.
Helping Ukraine is above all a moral obligation, but also a commitment that Poland would not have been able to meet if it had not been for the solid foundations of the Polish economy and the strong financial position of the central bank, for which we have worked diligently over the past years. This hard work and prudence has made Poland a strong state and the NBP a strong central bank.