Jacek Jastrzębski, Chair of the KNF, spoke during the Debate of the Presidents, a traditional highlight of the European Financial Congress. This year’s discussion titled ‘The Bank as an Institution That Doesn’t Live on Money Alone’ was aimed at addressing key challenges of the Polish economy and answering the questions about the long-term financial safety of Poles.

The main message from Jacek Jastrzębski at the debate was the call for returning to the basic function of banks, namely financing the economy through loans. In his opinion, we are witnessing a paradox: banks are increasingly focused on risk, while it is the supervision authority that encourages them to expand business activity.

The Chair of the KNF emphasised that lending was the cornerstone of banking business and was based on the following triad of confidence: belief in the counterparty, belief in the contract, and belief in the institution that would enable the enforcement of contractual rights. For this reason, one of the most important tasks of the state and the supervision authority is to build a predictable regulatory environment, which is conducive to making business decisions, and thus, increasing the financing of the economy.

Jacek Jastrzębski also drew the attention of the audience to the fact that current regulations and market conditions favoured passivity instead of activity. In his view, banks are overly willing to invest their assets in safe treasury bonds, which limits the scale of providing credit to businesses and households. The supervisory authority therefore expects more readiness to take risk and, of course, to manage it responsibly.

In reference to innovation financing by banks, a topic which emerged during the debate, Jacek Jastrzębski has highlighted that it is necessary to follow a nuanced approach. On the one hand, banks cannot accept the financing of projects which, due to their risk profile, should be financed using other sources, in particular using market sources. On the other hand, some involvement of institutional investors, such as banks or insurers, in the financing of innovations using private-market mechanisms may become a flywheel that drives the development of the ecosystem for innovation financing. 

Therefore, it is worth developing solutions that send such a boosting signal in a manner that is safe for the banks involved, by establishing appropriate structures. Innovate.pl may serve as an example of such an initiative and the UKNF is involved in dialogue with the Polish Development Fund (PFR S.A.) on the development of mechanisms to help banks get involved in this initiative safety and rationally. The Chair has also declared he is ready to further explore solutions that have proved successful in other markets.