The macroprudential framework in Poland...

Anna Dobrzańska/ Financial Stability Department

Vienna / 2 June 2016

The macroprudential framework in Poland –

institutional and organizational aspects

Agenda

The macroprudential framework in Poland – institutional and organizational aspects 2

1 Financial safety net in Poland

2Macroprudential framework in Poland – Financial Stability

Committee as a macroprudential authority

3 The role of the NBP in macroprudential policy

4 Experience gained so far

5 Conclusions

Financial safety net in Poland

1


Financial safety net in Poland (1)

The macroprudential framework in Poland – institutional and organizational aspects

■ The Polish financial safety net is composed of 4 institutions that are

involved in protecting financial stability:

■ the Narodowy Bank Polski

■ the Polish Financial Supervision Authority which is a separate supervisory and

regulatory agency; it oversees three segments of the financial market: banking

and insurance sector as well as capital markets,

■ the Ministry of Finance,

■ the Bank Guarantee Fund which is a deposit guarantee scheme and resolution

authority.

4

Financial safety net in Poland (2)


Narodowy Bank

Polski (NBP)

Polish Financial

Supervision

Authority

Ministry of

Finance

Bank Guarantee

Fund

Crisis prevention Oversight of

payment

systems

Macroeconomic

and financial

stability analyses

Authorization

Regulations and

recommendations

to financial

institutions

On-site and off-

site inspections

Sanctions

Regulations Systemic risk

reduction (by

deposit

protection)

Resolution

planning

Crisis

management and

resolution

LoLR Rehabilitation

programs

State aid

Nationalization

Deposit payout

Resolution

■ Financial stability is a common objective of four main financial safety

institutions

■ Each institution has its own competences and tasks

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Financial Stability Committee


■ established in 2008 (amended 2013) as a platform for exchanging views,

opinions and information as well as for coordinating actions in crisis

management

■ the aim is to ensure effective coordination and exchange of information in

order to maintain the domestic financial stability

■ members:

■ Minister of Finance

■ Governor of the NBP

■ Chairperson of the FSA

■ President of the Management Board of the BGF

6

Financial Stability

Committee

NarodowyBank Polski

(NBP)

Polish Financial

Supervision Authority

(FSA)

Bank Guarantee

Fund (BGF)

Ministry of Finance

(MF)

Macroprudential framework in Poland –

Financial Stability Committee as a

macroprudential authority

2


Macroprudential framework


■ Regulatory requirements:

■ ESRB Recommendation on macroprudential mandate of national authorities

■ CRDIV/CRR

■ Works on establishing formal macroprudential framework in Poland started

in 2011

■ The NBP prepared internally a draft act and in 2012 submitted it to the Minister of

Finance who has legislative initiative.

■ Initially it was planned to establish the Systemic Risk Board as a separate

macroprudential authority – this idea was abandoned.

■ In the end, the act establishing macroprudential framework reshapes and

broadens the mandate of the existing Financial Stability Committee to include

also macroprudential tasks.

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Financial Stability Committee as a macroprudential authority (1)


■ The Financial Stability Committee (FSC) as a macroprudential authority was set

by the act of 5 August 2015 on macroprudential supervision over financial system

and crisis management which entered into force on 1 November 2015.

■ Main determinants of a macroprudential institutional framework

■ existing financial safety net arrangements, especially the fact that banking

supervision is outside the central bank

■ necessity to engage all financial safety net institutions in order to make full use of

their knowledge and expertise

■ constitutional constraints – the FSC given only soft (non-binding) powers

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Financial Stability Committee as a macroprudential authority (2)


■ Macroprudential tasks of the FSC:

■ application of macroprudential tools, in particular issuing statements and

recommendations

■ identification of systemically important institutions

■ coordination with ESRB and other macroprudential authorities of EU Member

States

■ The Financial Stability Committee functions in two sessions:

■ Macroprudential session

■ under the chairmanship of the NBP Governor

■ secretariat is ensured by the NBP

■ obligation to present an annual report to the Parliament

■ Crisis management session

■ under the chairmanship of the Minister of Finance

■ secretariat is ensured by the Ministry of Finance

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Powers of FSC

■ Macroprudential instruments

■ FSC has only soft powers:

■ statements

■ recommendations backed by „comply or explain” mechanism, issued to financial safety net institutions (MoF, FSA, BGF, NBP)

■ Minister of Finance has powers to issue an order imposing countercyclical buffer, systemic risk buffer and national measures of art. 458 CRR.

■ FSA has powers to identify G-SIIs and O-SIIs and impose on them additional buffers by the way of supervisory decision.


FSCrecommendation MoF order

banks/

financial

institutions

Mechanism of setting CCB, SRB, measures of art. 458 CRR

The role of the NBP in macroprudential policy

3


Legal provisions – tasks of NBP


■ Article 17 paragraph 4 of the Act on Narodowy Bank Polski

The scope of activities of the NBP Management Board shall include, in particular:

(…)

5) assessing the operation of the banking system,

5a) analysing stability of domestic financial system,

■ Article 3 paragraph 2 of the Act on Narodowy Bank Polski states:

The tasks of the NBP shall also include:

(…)

5) regulating the liquidity of the banks and providing them with refinancing facilities,

6) establishing the necessary conditions for the development of the banking system,

6a) acting to sustain stability of the domestic financial system,

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The new act establishing macroprudential framework adds another task:

6b) acting to eliminate or limit systemic risk

The FSC and Narodowy Bank Polski


■ The NBP is also obliged to prepare analytical documents on the basis of which

the FSC makes decisions.

■ The scope of information provided to the FSC by the NBP is wide:

■ information and data necessary for the assessment of systemic risk (also protected)

■ analyses, documents and opinions concerning assessment of systemic risk, financial

stability and macroeconomic imbalances

■ information on the actions taken by the addressees of the FSC recommendations

■ information on consultations with other EU institutions and macroprudential authorities

■ The FSC in its macroprudential function is chaired by the Governor of the NBP

■ The act establishing macroprudential framework confers on the NBP additional tasks:

■ providing secretariat for the FSC

■ organizing meetings of the FSC

■ preparing draft resolutions of the FSC

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Experience gained so far

4


Activity of the Financial Stability Committee


■ The FSC meets quarterly. So far 3 meetings of the FSC:

■ 23 December 2015

■ 22 February 2016

■ 13 May 2016

■ At each meeting the Members of the FSC:

■ discuss risks to financial stability and necessity to undertake measures

■ take decision on a recommendation on CCB rate

■ approve notification to the ESRB

■ The FSC has defined intermediary objectives of macroprudential

supervision

■ The FSC web page started working at the end of 2015

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The FSC web page


Conclusions


■ The FSC is a macroprudential authority

■ The NBP Governor chairs the FSC as a macroprudential authority

■ Accountability to the Parliament

■ Soft powers: statements and recommendations

■ Addressees are not bound by the FSC recommendations (only comply or

explain mechanism)

■ Importance of inter-institutional cooperation!!

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The macroprudential framework in Poland...

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