The Unassuming Economist

“Financial sector supervision has focused on mitigating vulnerabilities. While earlier tightening of prudential regulation has halted new FX lending, the Polish Financial Supervision Authority (KNF) has recently acted to limit risks associated with the still-high outstanding stock of foreign-currency mortgages. Banks with significant foreign-currency exposure have been requested to retain dividends and further boost capital. In staff’s view, these measures, along with case-by-case restructuring of distressed FX-denominated mortgages, should be sufficient to address vulnerabilities in this loan segment. Any wholesale measures, such as a system-wide conversion of FX mortgages into zloty, should thus be avoided. Alongside, the authorities have continued to address vulnerabilities in the small, but weak credit union segment”, according to the latest IMF report on Poland.