The Banking System

Ekonomia III rok

Magdalena Cupryjak 91506

Almost all of us have at least once contact with banking, either by having a bank account, making deposits and withdrawals at an ATM or paying with credit card. These are one among many elements of banking.

The banking system is one of the most important elements of the construction and functioning of the monetary and credit economy. The system consists of banks which are authorized to operate in the country and regulations indicating you correct the work of banks. The banking system in any country is determined by the Banking Law. It identifies types of banks, their tasks, the role of the central bank and supervisory tasks. The banking system in Poland consists of three basic elements;

• Banking institutions (central banks, cooperative banks, commercial banks)

• Inter-linkages and dependencies between them and the environment

• Regulations¹.

Regarding the legal arrangements are the most important 3 of the Act;

• Banking Law²

• Act on the National Bank of Poland (NBP)³

• Act on Mortgage Bonds and Mortgage Banks⁴.

Polish law defines the functions of the banking system in the country. The most important of these can include:

• The issuance and regulation - the central bank is responsible for issuing money and regulating its supply

• Loans and deposits - especially in commercial banks by creating deposits and granting loans and advances

• Settlement - the banks on behalf of clients are making the settlement money in your bank account

• Advice and protection - the bank by consulting secures the interests of their clients

• Stimulation - the bank is responsible for the development of local enterprise through the provision of capital⁵.

The most important institutions for proper operation of all the mechanisms of banking institutions are as follows;

• National Bank of Poland⁶,

• Polish Financial Supervision Authority

• Bank Guarantee Fund^{7 8}.

The first institution, the National Bank of Poland is the central bank. Has the exclusive right to issue money, holds the accounts of the state budget. He is responsible for stabilization of prices and a reserve credit for commercial banks⁹.

Polish Financial Supervision Authority is responsible for the supervision and monitoring, the stability of the banking sector, capital market, insurance and pension. It supervises the issue of electronic money institutions and payment services. In addition, the task of the FSC is to take measures to streamline activities and the development of the banking sector¹⁰.

The last foundation of the banking system in Poland is the Bank Guarantee Fund. Its main task is to manage the Deposit Guarantee Scheme to ensure the security and stability of the financial market. Besides, it is responsible for acquiring and analyzing information on banks belonging to the guarantee scheme¹¹.

It can be concluded that the Polish banking system there are 3 types of banks.

• Commercial banks

• Cooperative banks

• Building Unions¹²

The first type of banks, the main aim is to achieve maximum profit. These banks themselves determine the policy of deposits and loans, but these activities are monitored by the relevant institutions (such as the Financial Supervision Commission) would not threaten the safety and stability of the banking system. These banks may have capital; state-owned, private, foreign or mixed. Commercial banks play an important role in the banking system. Almost 94% of deposits and 94% of loans are at commercial banks¹³.

The second type most common in Poland are co-operative banks. The primary purpose of the activity is to provide owners of capital access to services, banking products, particularly for low-interest loans. To cooperative banks able to enter the local market must get permission from the regional banks¹⁴.

Recently presented the type of banks are Building Unions. They are independent and their core business is financing the construction industry.

Picture 1. Banks in Poland, their shareholders and owners.

Source:  Usługi Biznesowe dla Sektora Finansowego, Success Story Of Poland, May 2013, Raport przygotowany przez Związek Liderów Sektora Usług Biznesowych(ABSL)

The banking sector in Poland has been a big change after the system transformation - abolished the monopoly system. After the transition period the sector was the fastest growing sector of the economy and are likely to continue to grow rapidly.

Sources:

1. Acts:

• the Act of 29 August 1997 – the Banking Law,

• the Act of 29 August 1997 on the National Bank of Poland (NBP),

• the Act of 29 August 1997 on covered bonds and mortgage banks,

• the Act of 14 December 1994 on the Bank Guarantee Fund (BGF

2. Reports:

• Usługi Biznesowe dla Sektora Finansowego, Success Story Of Poland, May 2013, Raport przygotowany przez Związek Liderów Sektora Usług Biznesowych(ABSL)

3. Websites:

• www.mf.gov.pl, Ministry of Finance

• www.investopedia.pl

• www.nbp.pl, The National Bank od Poland,

• www.bgf.pl, Bank Guarantee Fund

• www.knf.gov.pl, Polish Financial Supervision Authority

• www.banking.about.com

• www.icba.coop

1^ “Banking system in Poland”, Ministry of Finance, website: http://www.mf.gov.pl/ministry-of-finance/financial-market-in-poland/banking-system

2^ the Act of 29 August 1997 – the Banking Law,

3^ the Act of 29 August 1997 on the National Bank of Poland (NBP),

4^ the Act of 29 August 1997 on covered bonds and mortgage banks,

5^“ The Banking System: Commercial Banking - What Banks Do?”, website:

http://www.investopedia.com/university/banking-system/banking-system1.asp

6^ “Activities of Narodowy Bank Polski”, Narodowy Bank Polski, website: http://www.nbp.pl/homen.aspx?f=/en/onbp/informacje/dzialalnosc_nbp.html

7^ “Who we are?” Bank Guarantee Found, website: http://www.bfg.pl/en/who-we-are-0,

8^ the Act of 14 December 1994 on the Bank Guarantee Fund (BGF)

9^ “Central bank functions”, Narodowy Bank Polski, website: http://www.nbp.pl/homen.aspx?f=/en/onbp/informacje/funkcje_banku_centralnego.html

10^ “Tasks and objectives”, Polish Financial Supervision Authority, website: http://www.knf.gov.pl/en/About_us/KNF_Polish_Financial_Supervision_Authority/task_and_objectives/index.html

11^ “Who we are?” Bank Guarantee Found, website: http://www.bfg.pl/en/who-we-are-0,

12^ „Types od Banks. What are the different types id Banks?” website: http://banking.about.com/od/businessbanking/a/typesofbanks.htm

13^„Commercial Bank”, website: http://www.investopedia.com/terms/c/commercialbank.asp

14^ „What is the co-operavite bank?” website: http://www.icba.coop/co-operative-bank/what-is-a-co-operative-bank.html

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