National Bank of Poland (NBP) fully expresses its solidarity with the National Bank of Ukraine and with the entire Ukrainian people in the face of the Russian armed aggression. It declares all necessary assistance for the National Bank of Ukraine. The Management Board of the NBP decided to grant a foreign currency swap to the National Bank of Ukraine up to the amount of PLN 4 billion.

A swap is a form of borrowing money between banks. It is an agreement between central banks to exchange currencies at a specified rate for a specified period of time.

The transaction consists of two loans; one central bank extends a loan in its own currency to the other central bank and at the same time it receives a loan from the other central bank in a different currency. Such a transaction will support Ukraine’s currency reserves.

Initially, central banks used swaps to finance some market interventions, but in recent years swap arrangements have become an important tool for maintaining financial stability and protecting the real economy from the effects of market tensions.

Adrian Andrzejewski