Poland’s central bank turns to ECB in spat with Tusk

Poland’s central bank is seeking support from the EU to defend it from Donald Tusk, claiming the incoming prime minister’s calls to remove its governor harm its independence.

The plea threatens to pull EU institutions including the European Central Bank into another fraught handover of power in Poland, with appointees of the outgoing rightwing government — which clashed with Brussels for years — now seeking help from Europe.

Tusk has repeatedly demanded the removal of National Bank of Poland president Adam Glapiński — a longstanding personal friend of Jarosław Kaczyński, whose ruling Law and Justice (PiS) party lost to a three-way coalition led by Tusk earlier this year.

Tusk, a former European Council president, accuses Glapiński of acting in the interests of PiS, including through a large cut to interest rates shortly before the October vote. He wants the governor investigated by a tribunal, in effect suspending him while the case is under review.

The NBP has now turned to the ECB, arguing that moving to oust Glapiński would undermine the independence of monetary policymakers across Europe.

“We are in contact with the ECB and we are discussing now this suspension issue with them,” Marta Kightley, first deputy governor of the Polish central bank, said in an interview with the Financial Times.

Poland sits outside the euro area, but the ECB is responsible for overseeing the European System of Central Banks, which lays down operating principles for all the EU’s central banks. “An attack on [the] independence [of the National Bank of Poland] may set a precedent and undermine the ESCB as a whole,” Kightley said.

Christine Lagarde, the ECB president, replied to the Polish central bank in a letter published on Monday, saying “any measure affecting your ability to perform your duties as governor of the National Bank of Poland may, if not lawful, affect your independence and by extension the [ECB] general council”. Glapiński is a member of the ECB’s general council along with all heads of EU national central banks. 

Lagarde told Glapiński that if this scenario did happen, “you could refer such resolution to the Court of Justice of the European Union and ask for the assessment of its lawfulness”.

The Polish central bank’s call for ECB help contrasts with years of disparaging comments by PiS ruling officials about the ECB and other EU institutions, which PiS accused of encroaching on Polish sovereignty. Glapiński has himself been an outspoken critic of the euro, recently also claiming that Tusk would now push Poland in to the common currency.

Tusk and his coalition partners have outlined plans to bring Glapiński before Poland’s state tribunal, which would force his suspension while his case was under court review. Tusk’s coalition, which is expected to take power on December 13, will hold a majority in parliament — the body responsible for triggering the tribunal’s intervention.

If the tribunal suspends Glapiński, “an appeal will be made to the European Court of Justice, because this suspension would breach the treaty on the functioning of the EU and statutes of the ESCB and of the ECB,” Kightley said.

“Central bankers are under public scrutiny and are often even verbally attacked, but I don’t know of another case where a governor is being threatened by politicians that he or she would be suspended for no legitimate reason, without having breached neither the constitution nor any law.”

In 2022 Glapiński was re-elected to a second term of six years. ECB rules state a governor of an EU national central bank can be dismissed only “if he no longer fulfils the conditions required for the performance of his duties or if he has been guilty of serious misconduct”.

The ECB can intervene by issuing a non-binding opinion on whether a move to remove a governor in any EU member state is legal, as it did as part of successful efforts to prevent the ousting of Ilmārs Rimšēvičs as head of Latvia’s central bank in 2019 over a money-laundering scandal.

On Friday Tusk said no final decision had yet been made about whether to seek to bring Glapiński before the tribunal. “I have no doubt that we will not do anything that would disturb stability or undermine the reputation of the Polish state in Europe,” Tusk said.

Glapiński represents one of the most difficult and contentious challenges for Tusk as he seeks to oust PiS loyalists. Until 2025 Tusk must also rule alongside President Andrzej Duda, a PiS appointee who has veto powers.

In September, Poland’s central bank shocked financial markets with a bigger than expected cut in interest rates, shortly before the fiercely contested election. At the time, Polish inflation was falling, but it was still above target in double digits, which would typically point to small rate cuts, if any at all.

The NBP cut benchmark rates by 0.75 percentage points, well beyond economists’ expectations for a cut of 0.25 percentage points.

Kightley noted that the cut was “not a decision by a single person” but instead approved by a majority vote in the bank’s monetary policy council.

Adam Bodnar, a former ombudsman who is expected to become Tusk’s justice minister, told the Financial Times it was important to probe whether Glapiński misused his central bank powers in an effort to influence October’s election. “We really don’t know what was the role of Mr Glapiński in the elections, and there might be good arguments to say that he was undermining the credibility of the bank,” Bodnar said. 

Kightley defended both her bank’s rate-cutting and its purchasing of government bonds against criticism from Tusk’s coalition.

“Our [bond] purchases were conducted in the secondary market, so there was no breach of independence and monetary financing, because the central bank was not directly purchasing government debt,” Kightley said. 

Of September’s big rate cut, she said: “I think that sometimes such a decisive move can be better than pacing things.”