Gronkiewicz-Waltz: "I never planned to become vice president of the EBRD."
Hanna Gronkiewicz-Waltz is considered by many to be the person who brought stability and credibility to Poland's banking sector. When the 47-year-old first took over as president of the National Bank of Poland (NBP) in 1992, many doubted a law professor with limited financial experience would be able to handle Poland's economic woes. These included sky-high inflation then at 44% scant foreign currency reserves, a sinking zloty and a scandal-ridden, insecure banking sector. But Gronkiewicz-Waltz, an indefatigable achiever who had carried out academic research on national banking, set out to incorporate accountability, security and profitability into a system of struggling banks. As a sworn protector of Poland's currency unit, Gronkiewicz-Waltz also helped win the zloty eventual respect and potency through a series of exchange-rate valuation systems. Now, midway through her second term, the central bank chief has accepted an offer to replace former Hungarian Prime Minister Miklos Nemeth as vice president of the European Bank for Reconstruction and Development (EBRD). Gronkiewicz-Waltz talked to the WBJ's Alexander Stocks about her NBP experiences and decision to leave her post. The following is an edited version of their conversation.
Q: Why did you decide to leave now? Several banking sector analysts have questioned your decision to leave halfway through your second term.
A: It's been nine years of work here. I think that's a long time. I think that whatever the opinion, this (new job) will be the highest position held by a Polish person. I think it's a very interesting job because the EBRD offers financing through different instruments for former communist countries. I think it's very important for Poland to have this transformation process going forward in countries such as Ukraine, Russia, Belarus and other former Soviet republics as well as poor countries. And at the same time not to stop the financing of projects in more advanced economies like Poland, the Czech Republic and Hungary.
Q: Is it really a promotion or a better job offering higher pay?
A: Of course the salary will be higher than here, but the cost of living is also higher. I think that for me it's a promotion because it's the only job in an international financial institution that could be taken by a Pole. Until now, you have no Poles in such positions in other international financial institutions.
Q: What will be your main responsibilities with the EBRD?
A: I think that generally the EBRD is a similar institution to our bank here. It makes decisions in a collegial way through the board and the board of directors. So they are not projects undertaken by one person. I was part of a collegial body. That's one thing. Also, I will have responsibility for personnel and administration. As a deputy president there, I'll have my office, an internal office and a legal department. Because I'm the only lawyer among our deputies, I'll also have the legal department.
Q: Some people have said that now is the perfect time for you to slip out before the SLD (Democratic Left Alliance) comes to power, as many are predicting.
A: I received the proposal from (EBRD President) Jean Lemierre when he came to Poland. Of course, it was not the first one as I also got an unofficial proposal at the beginning of this year. I had the most recent proposal in September and said 'yes' to it. It had to be a quick decision.
Q: What do you hope to accomplish at the EBRD?
A: I think at first I can contribute my knowledge about the region. I know most of the ministers of finance and governors of the central banks. I have very good relationships with them. I know about their countries.
Q: Will the EBRD continue to finance Poland despite its position as one of the more developed economies of the region?
A: It depends on the year, of course. This year, Poland will receive a minimum of $300 million. But it hasn't happened every year. Altogether it's about e1.4 billion.
Q: Is it true that the EBRD is planning to discontinue financing projects in the former Soviet-bloc economies that have been more successful?
A: Yes, it was the so-called graduation approach. As an EBRD governor, I argued against this approach and fortunately, when I talked to Lemierre, he doesn't intend to drop the EBRD from the more mature economies.
Q: How long have you known Mr. Lemierre?
A: We met for the first time it was a very short meeting at the 200th anniversary of Banc de France. It was May or June, but we didn't speak on this subject. In Riga in May (during the annual EBRD conference) I voted for him.
Q: Some independent voices have suggested that Poland is heading into a financial crisis. What is your opinion about the shape of the economy?
A: My opinion is that the economy will be more stable than it was, for example, during the first part of the year. The inflation rate is going down and the account deficit has been kept at the same level. It's finally slowed down a lot. Probably we'll have lower growth, but that's also good for stabilization. And I don't think we could have what's called a currency crisis because currency crises go together with unsound banking systems. I think our banking sector is in a good state. I think that if you watch the zloty and the euro, you'll see that sometimes the zloty is stronger than the euro. If the zloty in the future will be, for example, weaker than the euro, that would be normal because it's a transforming economy, a converging economy. The euro is the power of 11 countries. In the past two years, it lost about one-third of its value and nobody called it a currency crisis. So even if we get more volatility than some expect, it doesn't mean we're having a currency crisis.
Q: The credit often goes to you for stabilizing the banking sector. What do you consider your most significant achievements as president of the NBP?
A: It's difficult to evaluate. I think, of course, it was my fight against inflation. It was difficult in our country because for 18 years until 1998, we had double-digit inflation like other former communist countries. I think good supervision is also important. There was always the possibility that we were heading back into a crisis As part of monetary policy, I think we had a very good foreign exchange-rate policy. We changed in a pragmatic way, from fixed-exchange rate issue to crawling peg, from crawling peg to floated managed system, from floated managed system to free zloty. I think the re-denomination of the zloty was important from the technical point of view, but also from the psychological point of view because it was the first time we had a denomination without losses. I think we also have a very well-trained staff.
Q: Who would you pick as your successor?
A: That's the task of the president and Parliament and I can only tell you the features they should possess. My successor should be independent. However, it can be someone from different political sides or parties, but independent in character. And, of course, the person should also know how to work with collegial bodies because the president has only one vote in the Monetary Policy Council (RPP) and one vote in the Banking Commission. My successor should be a strong manager to sit on the management board, because the management board doesn't vote, of course, but makes decisions based on consensus.
Q: Does anybody stand out when you consider who might have these qualities?
A: I think it's true what the president said, that he has in mind seven or eight candidates.
Q: What monetary policy and interest rate decisions do you consider important for the RPP in the future?
A: I think we should fulfill the (inflation) target for next year, which is 6-8%. We've already taken care of filling up currency reserves, freeing the currency and dealing with many other problems. Interest rates still need to be dealt with.
Q: Some people can't remember the NBP without you and question whether or not it will function properly without your leadership. Do you believe there could be problems when you leave?
A: When (Former Finance Minister Leszek) Balcerowicz left the government nothing special happened and I think nothing will happen, especially here in the bank because this is a collegial body. Also, when we published the decision to raise interest rates in August, that decision was undertaken by nine people. I don't think there's any danger when you've got a monetary policy council that knows what needs to be done.
Q: Your leadership and management skills are said to be outstanding
A: I know how to choose the right people. Of this, I'm sure. I'm not afraid to hire good people. I like to have the best around me.
Q: What do you see yourself doing after your four-year stint at the EBRD?
A: I never plan my life. I never planned to become the governor of the central bank. I never planned to become vice president of the EBRD. I just undertake choices in life and until now, I haven't regretted it.
