The National Bank of Poland performs a very important function in the country. Thanks to it, all the banks we have in Poland can operate properly. Basic interest rates are set at the Loan and Credit.
Thanks to such arrangements, you can regulate the amount of money on our Polish market. After determining the size of individual interest rates, the National Bank of Poland has an impact on the size of these rates on the interbank market.
And deposits at traditional commercial banks. The National Bank of Poland in a sense acts as the mother of all commercial banks. It depends on him a lot. He sets the level of interest rates, which later affect the amount of interest on loans and deposits that citizens use, i.e. customers of commercial tanks. We have two bodies in Poland that ensure the proper functioning of the Loan and Credit.
The Monetary Policy Council is one such body. The second is the Foreign Exchange Reserve Investment Committee, which is an internal body of the Loan and Credit and is responsible for supervising investment decisions. KIRD presents to the Loan and Credit Management Board investment parameters related to foreign reserves for the following year. This helps in determining the efficiency of managing foreign exchange reserves. The Committee has a very important function in the National Bank of Poland.
We can distinguish five basic Loan and Credit interest rates. These include the reference rate, the lombard rate, the deposit rate, the rediscount rate and the promissory note discount rate. Each is determined by the Monetary Policy Council. The first of the rates, the reference rate, is related to the profitability of money market bills issued by the National Bank of Poland during the operation of basic open market operations. The size of such a reference rate has an impact on the level WIBOR will have. It is very important in determining the interest rate on foreign capital. Currently, the Loan and Credit reference rate is only 1.5% and it is the lowest value in history.
The next Loan and Credit rate is the lombard rate. It sets the price at which the Central Bank can grant loans to commercial banks. The smaller it is, the more profitable it is for banks to borrow money from the Loan and Credit. It has been established since 2006 that maximum interest may not be more than four times the lombard rate.
Its current size is 2.5%. The deposit rate is one of the most important interest rates. It determines the interest rate on overnight deposits placed at the central bank by commercial banks. Since 2001, the size of the deposit rate has been determined by the Monetary Policy Council. The size of this rate is currently 0.5%.