Central bank should stabilize FX reserves - supreme audit authority
April 3, 2014
Poland's central bank NBP should not increase its FX reserves any more, as their maintenance is very costly, Poland's Supreme Audit Chamber NIK said in a report.
Poland's central bank did a good job of managing FX reserves in the years 2009-2013 but should stabilize their level now in order to limit the negative effects of banking sector overliquidity, said in a report.
"In order to minimize the negative effect of [banking sector] overliquidity on monetary policy, it would be justified to stabilize the level of FX reserves, in NIK's view," the report reads pointing to a nearly fourfold growth of overliquidity reduction costs in 2009-2013 resulting from the doubling of FX reserves in the period.
Since 2012 the result on investing FX means has not been sufficient to cover the costs of monetary policy, NIK said.
"Since 2012 these costs have exceeded the result on FX reserves' management," NIK said but added that it was of "secondary significance" considering the basic goal of maintaining security and stability of reserves.
Poland's FX reserves in 2009-2013 increased to EUR 81.9 bln from EUR 44.1 bln, the report showed.