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It is worth considering seriously enabling the Polish National Bank (NBP) to use non-standard instruments, such as purchasing corporate bonds, and also – the possibility of a central bank presence in the shareholding of listed companies, says a member of the Monetary Policy Council (MPC) Eryk Łon.


“I think it is worth seriously considering the introduction of non-standard instruments to the instruments of the NBP. The key role in the NBP monetary policy should be the potential effectiveness of individual instruments. Obviously, the role of standard instruments is likely to be still significant, but I think that the importance of non-standard instruments may grow only, that they will become a permanent element of the monetary policy of individual central banks, and it is worth also for the NBP to consider their application, especially during crisis periods. There is no reason, for example, that Polish businesses be deprived of the right of their competitors in the euro zone”- wrote Łon in an article published on the portal wGospodarce.pl.

These competitors issue corporate bonds whose buyer on the primary market is also the European Central Bank. From the point of view of a certain levelling of competition rules, it is worth for the NBP to allow the possibility of buying corporate bonds, he pointed out. According to him, there are no obstacles for the NBP to undertake this type of activity during the moderate slowdown of economic growth.

“The second element that should be considered, and which is used by the Bank of Japan is the activity of the central bank on the domestic stock market, I think that these activities would require even more additional analyzes carried out at the central bank and they would be justified first of all if central bank analysts would recognize that the shares of companies listed on the Warsaw Stock Exchange, at some point are too strongly undervalued, the rules for the qualification of company shares in the NBP’s portfolio would have to be defined “- the member of the Council further wrote.

He stressed that in his opinion, currently, monetary policy can cope in our country without such measures. In the long-term perspective, however, it is definitely worth considering the central bank’s involvement in the stock market.

“Perhaps in the future, it is worth for the NBP to become one of the shareholders of the Warsaw Stock Exchange. As for the goals that the Polish central bank could achieve by engaging in the Polish stock market, I would personally see these goals as multiple goals, which should not be disclosed in detail in public “- indicated Łon.

“In general, however, I see the possibility of cooperation between the Warsaw Stock Exchange and the National Bank of Poland.” The presence of a central bank in the shareholding structure of listed companies would be one of the forms of conducting actions aimed at recovering, consolidating and extending the Polish state of ownership in our economy.NBP could play a major role given to the assets it holds “- believes the MPC member. He also noted that the NBP had already conducted non-standard activities in the past when, for example, in 1997 it took term deposits, ie it performed activities typical of commercial banks.

“I am aware that the discussion about the use of non-standard instruments may rise different types of disputes and emotions, but it is worth realizing that we are facing major changes in central banking around the world. I think that the last crisis has caused the appearance of such non-standard instruments which use in the future will probably be something relatively common and that is why it is worth preparing for these new times “- summed up Lon.

Bottomline: This tendency for Polish central bankers to mirror actions of their bigger peers (to some extent) is not really new. Comments from Mr. Lon come few months after it became quite evident that NBP could have mirrored ECB’s balance sheet expansion as chart below, comparing NBP’s and ECB’s balance sheets, may suggest.

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