Monetary Policy of the National Bank of Poland in the Context of Excess Liquidity in Credit (Depository*) Institutions in Poland, 2020-2024
Purpose: This paper looks into the ongoing excess liquidity in Poland’s banking system between 2020 and 2024, investigating its causes, repercussions, and the role of monetary policy in influencing it. Design/Methodology/Approach: The study uses official NBP data and statistical reports and employs the central bank’s own methodology for measuring excess liquidity. It utilizes factor decomposition, reserve-ratio analysis, and year-on-year comparisons to assess the effectiveness of monetary policy tools. Findings: The study demonstrates that monetary policy in this period was largely ineffective in containing excess liquidity. The tools used by the NBP absorbed liquidity only temporarily, while structural factors allowed the surplus to persist and grow. Practical Implications: The results indicate that without significant changes to the structure of the NBP assets and a reassessment of reserve requirements, Poland’s monetary authorities will continue to struggle to reAduce excess liquidity. This will continue to have immediate effects on controlling inflation as well as on monetary transmission. Originality/Value: This paper provides a comprehensive account of excess liquidity in Poland’s banking sector during an exceptional period marked by the pandemic and the energy crisis. It highlights the structural weaknesses of current monetary tools and offers insights into possible reforms.