Adam Glapińskiduring the conference after the Monetary Policy Council's decision, was asked about the financing by the National Bank of Poland of the so-called SAFE 0 percent — a presidential alternative to the EU program SAFE. Can the National Bank of Poland sell gold to provide the government with PLN 185 billion for armaments?
Continued below the video:
— I did not present (on Wednesday – editor) any specifics that can be referred to. For a simple reason. Both the government (…) and the president, to whom I presented it orally, must first become familiar with these concepts – Adam Glapiński said on Thursday. — It is appropriate to present it to them first, listen to their comments, and then present it to the public.
Less than two hours before Adam Glapiński's Thursday conference on interest rates, advisor to President Karol Nawrocki published details about “SAFE 0 percent”which presented, among others, mechanism of generating NBP profit through gold:
SAFE 0 percent
President of the National Bank of Poland about “SAFE 0 percent”. We intend to act in accordance with the law
— We intend to propose actions that will not lead to a reduction in our foreign exchange reserves — he said about “SAFE 0 percent.” Adam Glapiński. He emphasized that the NBP will operate within the framework of applicable law: the Constitution of the Republic of Poland and the provisions of the Act on the NBP.
— Currently a quantitative easing operation (purchasing bonds by the central bank – ed.) would be illegal – he added.
See also: Poland is a powerhouse when it comes to gold reserves. Will Karol Nawrocki use it?
Adam Glapiński on the NBP's profit
According to the president of the National Bank of Poland, the central bank's profit transferred to the government should go entirely to the Armed Forces Support Fund. According to Glapiński, a draft law regulating such activities could be prepared, e.g. in the Ministry of Defense or the President's office.
He added that if this bill passes in the Sejm and is accepted by the president, it will have to be “agreed” at the level of the European Central Bank (ECB).
Adam Glapiński about NBP gold and the wave of criticism. “Cabaret reading”
As the president of the NBP said, he “has not presented anything specific yet”, and a “long procession” of statements has already appeared in the public space.
— Today, two hours ago, I received a printout of all statements (comments after yesterday's conference of the President of the National Bank of Poland and the President – ed.). If it weren't for the fact that the matter concerns serious matters, I would say that it is a good comedy read – said the president of the NBP.
See also: Plan for “SAFE 0 percent”. “The President of the National Bank of Poland wants to sell gold and buy it immediately”
What do we know about “SAFE zero”?
At the end of December, the NBP had 550 tons of gold in its reserves. During the conference on Wednesday, the president and the president of the NBP clearly suggested that it is the precious metal in the central bank's treasury that will help generate funds that will cover the multi-billion costs of “SAFE 0%”, the presidential alternative to the EU SAFE program, which is criticized by PiS and which is waiting for the president's signature.
How does NBP intend to do this? As Business Insider Polska found out, the president of the NBP wants to sell gold and buy it immediately. On the one hand, such an operation will not deplete the NBP's foreign exchange reserves, and on the other hand, it will allow to show the realized profit on the difference between the purchase price and the selling price of gold. More details in this text.
If NBP has financial result supplements, 95 percent profit goes to the budget (this has not happened in recent years, as the central bank had a loss).
Will NBP gold finance armaments? There are two paths
The presentation published on Thursday by Jacek Skiba, social advisor to Karol Nawrocki, shows that the NBP has two possible paths:
— Option A – sale and repurchase: NBP sells part of the gold at the market price and immediately buys it back from foreign exchange reserves. The condition of the bullion remains unchanged and the realized cash profit appears in the books.
— Option B – accounting revaluation — the amendment to the NBP Act allows the difference from the valuation of gold to be reclassified directly to the financial result, without the physical sale of the precious metal. This option, however, would require an amendment to the act, which requires the consent of the Sejm, the Senate and the president.
