The Unassuming Economist

On foreign-currency mortgages, the new IMF report on Poland says that “While tighter prudential regulation has halted new FX lending, a substantial legacy stock of these loans remains. Close to half of mortgages are denominated in FX (mostly Swiss franc), exposing households and banks to sudden zloty depreciation—as was the case in January when the zloty depreciated around 20 percent against the Swiss franc. As such, the January episode had little macroeconomic impact and high capital buffers in banks mitigated financial stability risks. In addition, the availability of emergency liquidity assistance from the NBP, supported by the swap line with the Swiss National Bank, further mitigated risks (…).”