Q&A: What’s next for Polish central bank after governor’s death?

By Kuba Jaworowski and Chris Borowski

WARSAW (BestGrowthStock) – Poland’s central bank governor Slawomir Skrzypek and President Lech Kaczynski died in a plane crash in Russia on Saturday.

Following is analysis of issues surrounding the appointment of Skrzypek’s successor and possible policy changes at the central bank.


The Polish constitution stipulates that the governor is appointed by the president for a six-year term, but his candidacy needs to be approved by parliament. Skrzypek was mid-way through his term.

But Kaczynski’s death clouds the process; the law does not clearly indicate whether Parliamentary Speaker Bronislaw Komorowski, who has taken over as acting president, can make the appointment before the presidential election that he must call within 14 days and hold within two months after that.

The central bank law requires that a new governor be appointed within three months of a vacancy, which would leave hardly any time after the election. Some analysts say that in order to signal stability at the central bank, the appointment could be made before the election if parliament reaches a consensus on a candidate.

Skrzypek’s top deputy Piotr Wiesiolek has taken over day-to-day management of the central bank, but it is not yet clear whether he will take on other responsibilities, such as voting during meetings of the Monetary Policy Council.

MPC member Elzbieta Chojna-Duch said in a television interview on Sunday that the council would discuss several legal questions surrounding the transition period, including how it would choose its chair for upcoming meetings.

The MPC usually meets twice a month, with its second sitting in the last week of the month deciding on interest rates.


Analysts are floating several possible candidates:

— Boguslaw Grabowski, a former MPC member who was known as a monetary policy hawk; he ended his six-year term in 2004 and now heads one of Poland’s largest investment funds, Skarbiec.

— Dariusz Filar, a former MPC member who ended his term this year; also seen as a hawk.

— Jerzy Pruski, who was the top deputy governor at the central bank for four years before falling out with Skrzypek in 2008. Since then he has served as chief executive of Poland’s largest bank, PKO BP, and now heads the Banking Guarantee Fund.

— Finance Minister Jacek Rostowski, who has held his post since 2007; he is widely respected for his management of the economy during the global financial crisis, from which Poland escaped relatively lightly.

An even more radical step would be to turn to Leszek Balcerowicz, who was governor of the central bank from 2001 to 2007 and was known as a strong hawk. Balcerowicz was one of the architects of Poland’s transition to a market economy two decades ago, and was praised abroad and sometimes criticized at home for his role. He pushed for pension and other reforms during a stint as finance minister in the late 1990s.

Some analysts speculate the choice could come from among the nine current MPC members, who took office this year.


Skrzypek, who had a tie-breaking vote, was once seen as the staunchest dove on the 10-member interest rate-setting body, and was on the losing end of several decisions.

But in recent months, as a new, more government-friendly MPC was appointed, Skrzypek had begun to speak of bringing the key rate above its all-time low of 3.5 percent. The latest Reuters poll, in March, found economists expecting the rate to rise to 4.0 percent by the end of this year.

Economists expect Komorowski, a member of the ruling party and an early favorite to win the presidential election, to pick a new governor who might be moderately more hawkish than Skrzypek, but there will probably be little if any effect on the full MPC’s rate decisions.


Skrzypek orchestrated the central bank’s intervention last Friday to halt the strengthening of the zloty, its first such move since the zloty’s free-float a decade ago.

There is speculation that Skrzypek’s successor may be less inclined to intervene against the zloty, but no clear evidence for this; Prime Minister Donald Tusk’s government backed the intervention, believing zloty strength could hurt the economic recovery.


The central bank under Skrzypek was seen as one of the few remaining bastions of euroskepticism in Poland; like Kaczynski, who appointed him, Skrzypek had appeared reluctant to commit to a target for joining the single currency.

The center-right government of Prime Minister Donald Tusk aims to adopt the euro as soon as 2015, after dropping a more ambitious target during the global financial crisis. Komorowski is expected to choose a central bank chief who is more supportive of euro entry.

Ultimately it is the government which decides on euro entry, though it must coordinate its policy with the central bank, which would need to take steps to keep the zloty within a euro-anchored ban for at least two years before adoption.


A new, more government-friendly central bank governor would likely end the row between the bank’s management, led by Skrzypek, and new MPC members close to the ruling coalition over the size of the bank’s profit, and therefore how much of the profit will go toward meeting Poland’s fiscal gap.

Under Polish law 95 percent of the profit is automatically transferred to the government, but there has been a bitter dispute over the size of required reserves; Skrzypek claimed the profit was only 4.2 billion zlotys, while other MPC members estimated it as roughly twice that amount.

Skrzypek’s successor may also drop the central bank’s opposition to extending Poland’s $20.5 billion flexible credit line from the International Monetary Fund, which was opened last year and expires in May.

Stock Today

(Edited by Andrew Torchia)

Q&A: What’s next for Polish central bank after governor’s death?