Document Type

Case Study

Case Series

Central Bank Swap Lines


The Polish zloty depreciated strongly after the collapse of Lehman Brothers in September 2008. At the same time, liquidity shortages occurred in the Polish market and Polish banks were constrained in borrowing from international markets. On November 6, 2008, the European Central Bank (ECB) and National Bank of Poland (NBP) signed a master agreement to enter into repurchase transactions (repos) for a maximum amount of EUR 10 billion. The NBP intended to use the repo agreement to provide foreign exchange liquidity to the Polish banking sector and ensure market stability. The ECB and NBP’s repo facility was unused as of June 2009. The peak outstanding usage by Polish banks of the NBP’s downstream foreign exchange swaps was approximately PLN 1.8 billion (EUR 0.4 billion) toward the end of December 2008. The ECB-NBP repo agreement and its collateral requirements were broadly based on the agreement between the ECB and Hungary’s central bank. The end date of the repo facilities for Poland was not disclosed. A Bank for International Settlements paper in 2010 said that NBP’s repo line with the ECB had made only a “modest contribution” to fixing the shortage of foreign currency in Poland. In 2020, ECB’s Executive Board members said that ECB liquidity facilities have a signaling effect that helps calm tensions in euro markets. On March 28, 2022, the ECB set up a new precautionary swap line with Poland with a limit of EUR 10 billion owing to the uncertainty created by Russia’s invasion of Ukraine. On December 15, 2022, the ECB extended its swap line with the NBP by nine months, to January 15, 2024.