Monetary policy under permanent excess liquidity: the case of Poland

Zbigniew Polański

Chapter 9 in Central Banking and Monetary Policy Implementation, 2025, pp 182-218 from Edward Elgar Publishing

Abstract: This chapter analyzes the implementation of monetary policy in Poland, focusing on its operational aspects, from the decomposition of the Soviet-type mono-bank system at the end of the 1980s until the recent quantitative easing (QE) experience. This is done against the background of the evolution of the banking system and its interbank market in particular. The major features of monetary policy implementation in Poland result from two factors. First, from structural excess liquidity permanently in place since the start of the post-socialist transition; in this context, new estimates of excess liquidity for the period after 1996 are provided. Second, from the adoption of the Eurosystem framework, although Poland retains its own currency. Contrary to the post-2007 situation in QE countries, excess liquidity in Poland has been mainly due to foreign inflows, chiefly foreign direct investment and European Union funds. Despite posing problems for monetary policy implementation and central bank finances, structural excess liquidity ultimately proved controllable and showed important improvement during crisis periods.

Keywords: Excess liquidity; Structural liquidity; Monetary policy instruments; National Bank of Poland; Interbank market; Quantitative easing (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035302796
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