NBP promises greater transparency to guard against money market swings

The National Bank of Poland (NBP) said yesterday it would fight sharp liquidity-driven swings on the domestic money market with new policy instruments and greater transparency of banking reserves data. The NBP said liquidity tightened on the inter-bank deposit market between October 26 and November 22, pushing overnight depo rates up to an average of 17.73%, far above the bank's benchmark 28-day intervention rate, then at 13%. One month deposits rose to a high of 16.15% from 14.63%, leading to an "unintended apparent tightening of monetary policy," the central bank said in a statement. "If this would have occurred during a period of strong shocks on emerging markets, investors could have believed that a speculative attack on the zloty had begun, because short-term interest rates rise in such a situation," the NBP said. The central bank announced that starting in December it would publish daily data about whether the banking system as a whole was on target to meet its monthly mandatory reserve requirements. Earlier, the rate-setting Monetary Policy Council (RPP) had announced that the NBP would from next month offer a new deposit rate, to guard one-day rates from falling close to zero in periods of excessive liquidity. (Reuters)