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Short History of Banking and Prospects for Its Development in Poland at the
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SHORT HISTORY OF BANKING AND PROSPECTS FOR ITS DEVELOPMENT
IN POLAND AT THE BEGINNING OF THE 21ST CENTURY

Łukasz Kuryłowicz

Faculty of Management
Bialystok University of Technology
November 2004

Abstract: The paper presents the genesis and development of the Polish banking system. Part one
is devoted to the history of banking in the world. It describes many achievements in the field of
money and banking beginning from ancient times up to the 20th century. In part two, the author
describes the events that have been taking place over the last 600 years - from the time of Casimir
III the Great to the modern times, and which shaped the present state of banking in Poland. Special
attention is paid to the prospects of the development of the banking sector in the early 21st century,
when Poland is one step from joining the European Union. That is what the third part of the paper
is dedicated to.

Keywords: banking, banking history, banks

 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

1. THE DEVELOPMENT OF THE WORLD BANKING SYSTEM

The origins of most of the current banking services can be traced down to the civilizations
characterised by the dynamic development of trade and culture. They were, among others, Lydia,
Phoenicia, Greece, China and Rome. As early as 2000 BC, the monks of the Ur temple in Chaldea,
Babylonia lent money thanks to the riches they possessed. In Mesopotamia, kings’ palaces and
temples, regarded as the most secured of all the places, accepted the first deposits in the form of
grain and other commodities. Regulations affecting the above-mentioned practices were reflected in
the Code of Hammurabi (ca 1792-1750 BC). Numerous rules and regulations with regards to loans
bear witness to the fact that the Babylonian banking, as well as the Assyrian banking, was well-
developed (Morawski, 2002, p. 17).
The ancient Greeks are primarily known for the invention of the coin, which took place in
around 635 BC. According to Herodotus, it is the Lydians, the people of a small kingdom whose
capital was Sardes, who can be attributed with that. He wrote that “they were the first men whom
we know about to coin and use gold and silver currency; and they were the first to sell by retail.”
In the Classical period, the banking system of Ancient Greece comprised of three segments: the
temples, private enterprises and public municipal banks. The temples, regarded as the most secure
places, were considered as credit institutions granting loans and accepting deposits. In the 5th
century BC, a new group of private bankers emerged. Based on the characteristics of their jobs, they
could be divided into:
- kollubistai who dealt with money exchange;
- danneistai who offered small mortgages;
- trapezitai who accepted deposits.
In some cities such as Miletus, the financial activity of the authorities was so complex that it
was indispensable to introduce municipal banks offering professional services.
All in all, the profession of a banker was frowned upon in Ancient Greece (Woyzbun, 1927, p.
20). That view changed in the Hellenistic Period when two main banking centres were formed. The
first one was Alexandria, Egypt where the bank, ran by the Ptolemaic dynasty, exchanged money,
offered loans or discounted bills. The other important banking centre was Rhodes. Due to the
shipowning being the most important to the industry, the insurance business thrived on too.
In the 3rd century BC, there were Roman bankers whose other name trapezitai was Greek-
derived and who later on were called argentari. The Forum was a place that was a must for anyone
doing business and it also certified of his/her solvency. The Argentari were obliged to keep two
ledgers. The first ledger was used to register transactions in the chronological order whereas the

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 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

second one contained customers’ debit and credit accounts. That laid the foundations for the
development of accounting.
In the 13th century, one saw a greater growth of the Italian trade, which had a great impact on
the development of banking in Italy. Initially at that time, the services offered by bankers were
limited to foreign currency exchange, but soon they expanded by, for instance, granting loans. The
number of banks in Italy increased too - there were 80 banks in Florence itself in 1250.
One of the first banks having the basic banking services as we know them today was the Bank
of Barcelona in Spain. It was established by city magistrates in 1401 and offered loans, accepted
deposits as well as acted as an agent in a foreign currency exchange.
In the Middle Ages, it was mainly the Jews, the Italians and the Germans who worked in
banking. Currency exchange, loans and, with time, deposits were widely offered especially in rich
Italian and Hanseatic cities. Later on that was also observed in Dutch and English cities. The
deposit banks formed back then were: Casa di San Giorgio in Genoa (1586), Banco di Riatto in
Venice (1587), Milan’s Banco di San Amrosio (1593) as well as the Bank of Amsterdam (1609),
the Bank of Hamburg (1619) and the Bank of Rotterdam (1653) (Baka, 2001, p. 11). The
aforementioned institutions were run mostly by goldsmiths-artisans who carried out their money
transactions at the table called banca in Italian. Together with the French word banque, it gave rise
to the word bank.
In order to make the use of means of payment easy, banknotes began to be utilised. Banknotes
as bills of exchange, representing the money deposited in the bank, recognised one’s right to collect
the precious metal and were vital in case of crediting someone’s bank account. In places such as
Florence, Barcelona, Geneva, Bruges, London and French Champagne where trade flourished, the
instrument in the form of a bill of exchange became widespread that facilitated the mass trade to
far-away countries without the need to transport precious metals and coins minted in silver, gold
and other metals. The constant transfer of funds between the accounts of particular merchants gave
rise to the giro system whose name comes from the Italian word giro meaning a circle
(Krzyżkiewicz, 2002, p. 36).
The banking industry was dominated by politicians and rich families such as the Medicis from
Florence as well as the Fuggers from Germany for over three centuries. The members of the
Rothschild family became the most influential bankers in Europe (and most probably in the world)
in the nineteenth century thanks to M. A. Rothschild (1743-1812) who was the progenitor of the
family and the influence of which was soon to be spread out across all the financial centres in
Europe.

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 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

So-called depositary receipts began to be widely used at the end of the seventeenth century.
They were issued by banks in exchange for the deposited funds. Merchants gladly accepted such a
depositary receipt as a method of payment for the goods as it could easily be exchanged for coins
afterwards. As a result, that was becoming more and more popular at the time, especially among
merchants who often had to travel with large sums of money. The use of paper money in Western
Europe was more and more widespread.
Initially, the depositary notes represented only the amount of gold actually deposited. After
some time, it was observed that the amount of gold withdrawn from the deposit was lower than the
one that had been lodged, which forced English bankers to lend some part of the gold (stored by
their depositaries) to other people in order to gain a profit in the form of the interests. In most cases,
those who borrowed money took depositary receipts instead of gold coins. Consequently, the total
value of such receipts that were in circulation was greater than the value of the deposited gold and
that was the beginning of the current fractional-reserve banking. It consists in banks keeping a
certain amount of the money deposited by their clients and lending the other part. Due to the fact
that money as depositary receipts was in the paper form, loans offered by goldsmiths contributed to
the increased money supply.
In subsequent years, each country granted permission to issue banknotes along with coins to
one bank only and that is how the institution of the central bank was formed. It also became an
issuing bank, which made it possible to control the money supply.
In 1800 Napoleon Bonaparte laid the foundations for the establishment of the Bank of France
that became the major financial institution in the country in the middle of the nineteenth century. At
the same time in Germany, some of the banks started to operate as joint-stock companies.
At the beginning of the twentieth century, one saw a division of banks owing to the fact that
issuing banks had a new, narrower scope of functions. There were central banks, commercial banks
(deposit banks, deposit and credit banks) and specialised banks (investment banks, mortgage banks,
agricultural banks, credit unions as well as savings banks).
The gold exchange standard existing in the 1920s and 1930s turned out to be unsuitable for the
international cash settlements. Because of the world-wide economic recession where there was a
tendency not to maintain the parity of national currencies in gold, many European countries began
to implement a guided currency system based on paper money. The new system was forged after
the Second World War at the conference in Bretton Woods, USA. One of its major decisions was
the establishment of the International Monetary Fund and the International Bank for Reconstruction
and Development also called the World Bank (Proniewski and Niedźwiecki, 2003, p. 100). At the

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 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

same time, commercial banks with international capital started to appear and the ones already
existing opened their branches abroad. It was caused by:
- the economic recovery;
- the increase in the international trade;
- the changes on the political map after World War II.
The following years brought a lot of development mainly in the field of technology. Financial
institutions, due to advances in telecommunications and computerisation, introduced new methods
of data transfer, which significantly reduced the time needed to complete domestic and international
banking operations, not to mention creating the electronic money.

2. THE DEVELOPMENT OF THE POLISH BANKING SYSTEM

The beginnings of the Polish banking system dates back to the times when Casimir III the Great
was the king of Poland (1333-1370). Banking was the domain of Nuremberg merchants, who
obviously were also involved in basic trading, as well as of Jewish bankers despite the fact that their
religion did not allow usury. Lewko was the one who was a moneylender to the king. Apart from
that, he was in charge of the mint and salt mines belonging to the king. Back then, the latter were
called żupy (Morawski, 2000). Merchants of German and Jewish origin still engaged in banking
during the rule of the Jagiellonians. The Morsztyns and the Szwarc Family, both coming from
Cracow, were initially the most prominent bankers. Władysław II Jagiełło (1386-1434) had his own
banker, a Jewish merchant, whose name was Wołczek. In Cracow towards the end of the fifteenth
century, the Betmans and the Boners from Wissembourg played a major role as they were
moneylenders to Jan I Albert (1492-1501). There is some scarce evidence of about 33 loans granted
in the XV century but it suggests the interest rates were in the region of between 3% and 10% with
6.5% being the average (Pelc, 1935, p. 95).
During the reign of Stephen Báthory (1575-1586), the development of small banks began.
Those were so-called mounts of piety (montes pietatis) based on an Italian model and organised by
the Church as credit and charity institutions. They dealt with less affluent people by offering them
small consumer loans first without interest and then at a small percentage. Houses were usually put
up as collateral. The first mount of piety was established in Vilnius in 1579 on the initiative of
Father Piotr Skarga, who founded the same type of institution in Cracow and Warsaw. Around
1600, mounts of piety also operated in Poznań, Pułtusk, Łowicz, Lviv and Zamość.
There were many attempts to circumvent the ban of the Church on usury. It was assumed that
the borrowed capital meant that the lender was losing profits, so compensation was collected as a
result of that. In other cases where the borrowed capital under the contract was to be repaid within a

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 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

very suspiciously short period of time, the lender had the right to be compensated for the delayed
repayment. Yet another way was to give someone a loan on the condition that they would sell their
goods with the right of repurchase. The debtor repaid the mortgage loan paying the interest to the
creditor in the form of a rent (Wójtowicz and Wójtowicz, 2003, pp. 76-78).
After Stanisław August Poniatowski (1764-1795) took over the Polish throne, Jewish banker
Berek Szmul ran the financial business for him. At that time, banking was becoming an independent
field of activity not necessarily related to trade. The main centre of money-lending became Warsaw
where numerous bank houses, mainly run by bankers from abroad, were established. Among the
bankers ennobled in 1791 were Piotr Fergusson Tepper, Karol Szulc, August Wilhelm Arndt,
Fryderyk Kabrit, Jan Meysner and Piotr Blank. Jan Klug, Fryderyk Segebarth, Frybes brothers,
Wincenty Laskiewicz and Andrzej Kapostas were praised too (Korzon, 1975, p. 179). Antoni Prot
Potocki, a magnate, was also involved in banking.
In 1772, the First Partition of Poland took place. Three years later, the weksel1 law was enacted
and attempts were made to reduce the interest rate for creditors (secular ones - 5% and the clergy -
3.5%), but the market fixed the price of short-term loans at 12%. There were projects to create a
national bank and to introduce paper money. Both ideas were never realised (Grodek, 1936, pp. 8-
18).
In 1793, Prussia and Russia made the Second Partition of Poland occupying an area inhabited
by 4 million people. That meant losing more than half of the economic potential remaining after the
First Partition, which ultimately led to the economic crisis. The largest bank houses fell - first the
Tepper’s bank and then most other big institutions. Only a few small ones survived.
After the Third Partition in 1795, King Stanisław August Poniatowski abdicated, and in 1797
the invaders signed a treaty on the perpetual liquidation of Poland. That led, among other things, to
the collapse of the newly-emerging banking system.
France and Russia signed a peace treaty in Tilsit, in 1807. It was decided to create the Duchy of
Warsaw from the Polish territories of the second and third Prussian occupations. Despite the
complicated situation, an attempt was made to resume banking activity. In 1808 Samuel Fraenkel's
bank house was erected. The fall of Napoleon, however, ended the existence of the Duchy of
Warsaw in 1815 (Wójtowicz and Wójtowicz, 2003, p. 126). In the same year, at the Congress of
Vienna, the Kingdom of Poland was created with the Russian tsar being the ruler. In the Kingdom

1
weksel - a bill of exchange

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 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

of Poland, economic affairs were begun to be organised. Treasury Minister Prince Ksawery Drucki-
Lubecki (1779-1846) played a leading role in this field establishing the Society of the Credit of
Land in Warsaw (Towarzystwo Kredytowe Ziemskie) in 1825 and the Bank of Poland as the
issuing and credit institution in 1828. The emergence of the latter involved the implementation of
the idea of a national bank that had been formulated since the 1770s. The Bank of Poland was a
state bank. It had the right to issue banknotes - the Polish złoty - up to the share capital, which was
held according to the so-called silver monometallism. That meant that the emitted Polish złoty was
convertible into silver coins and how much money was issued depended on the amount of silver the
Bank of Poland possessed (Leszczyńska, 2004, p. 4).
Stimulation of the economy encouraged private banking interests. Since 1817 other banks had
been established: Alexander Wertheim’s, Samuel Kronenberg’s, Matias Rosen’s, Alexander
Rawicz’s and other smaller ones. The activities of the Bank of Poland related to the issue of money,
service of the government and public institutions were gradually taken over by the Russian
institutions. That was a consequence of the end of the independence of the Kingdom of Poland and
the ever-deeper integration with the Empire. The last issue of the Kingdom's money came in 1866,
and four years later, the Polish Bank finally was deprived of that privilege. It was passed on to the
Russian State Bank that had been established in 1860 (Leszczyńska, 2004, p. 5).
In the same year, under the Russian government, on the basis of government concessions and
with numerous restrictions, the authorities allowed the activity of private banks in the form of joint-
stock companies. On the initiative of Leopold Kronenberg in 1870, Bank Handlowy w Warszawie
S.A. was established. In the next few years, further joint-stock banks were established in Warsaw,
Łódź and Vilnius. The next wave of formation of joint-stock banks occurred at the end of the
century. Next to them, credit cooperatives developed.
In the Polish territory annexed by Prussia, banking was underdeveloped despite a liberal law
requiring only registration not concession. In 1862, "Tellus" Bank S.A. in Poznań was formed. Its
involvement in speculative stock market operations led to its collapse in 1873 and that aroused
distrust of clients and a negative opinion about the bad condition of the Polish banking. The
atmosphere was improved by credit unions whose headquarters were at Bank Związku Spółek
Zarobkowych S.A. founded in Poznań in 1886.
In the Austrian part (that once used to be Poland), there were initially several dozens of small
banking houses. The banking law was quite liberal requiring concessions but did not limit the scope
of banking operations. In 1867, the first joint-stock bank was established in Lviv - Galicyjski
Akcyjny Bank Hipoteczny S.A. Credit operations were performed by a public bank called Bank
Krajowy dla Królestw Galicji i Lodomerii z Wielkim Księstwem Krakowskim (the National Bank

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 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

for the Kingdoms of Galicia and Lodomeria with the Grand Duchy of Cracow) which began
operating in 1883. In Galicia, extended communal and cooperative banking was also active
(Morawski, 1998, pp. 40-41), but frequent bank crises resulted in the bankruptcy of banks
(Wójtowicz and Wójtowicz, 2003, pp. 129-130).
On November 11, 1918, the First World War ended and Poland was back on the map of
Europe. By 1923, the number of joint-stock banks had increased from 37 to 111. State banks were
formed including Pocztowa Kasa Oszczędności or PKO (the Postal Savings Bank) and Państwowy
Bank Rolny called PBR for short (the State Farm Bank). In December 1918, by the decree of the
Head of State 2 , the authorities took over Polska Krajowa Kasa Pożyczkowa, PKKP (the Polish
National Credit Union) that was created by the Germans in 1916 and recognised it as a temporary
issue institution " (...) before the Sejm passed a resolution on the establishment of the Bank of
Poland."
Due to the financing of the budget deficit with the PKKP credit (through money issue) from
June 1923 to January 1924, retail prices increased 286 times. Inflation reached the stage of
hyperinflation. Gradual and ever-increasing degradation of the Polish mark disorganised lending to
the economy. The role of the main lender was taken over by the PKKP with interest rates on loans
of up to 72%. The rates of other banks were up to 500% and those of non-bank loans jumped to
5,000%. Inflation initially afforded the prospect of apparent expansion. The number of banks
largely resorting to speculative operations was falling while banks were losing money. During
hyperinflation, the banks' activities, apart from PKKP’s, were practically stopped.
On April 8, 1924, Bank Polski S.A. (the Bank of Poland) started its operations and the Polish
National Credit Union was liquidated. Also, the exchange of the Polish mark for the Polish złoty
began (Leszczyńska, 2004, p. 10). The currency reform created conditions enabling banking
reorganisation after the inflation period. PKO and PBR were capitalised. As a result of the merger
of three Galician public banks, Bank Gospodarstwa Krajowego was established. State banks, in
view of the weakness of domestic private capital, were to focus on providing long-term loans.
Short-term loans were more often attributed to private banks.
After the crisis in 1925, the number of private banks fell from 82 to 51. In 1929, Bank Polska
Kasa Opieki S.A. was established. It was entrusted with servicing the savings of Polish emigrants.
Bank supervision was organised and bank regulations were amended. The Great Depression of 1929

2
Decree of December 7th, 1918 (Polish Journal of Laws 1918 No. 19 item 56).

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 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

affected primarily private banks. In 1930, withdrawals of deposits by domestic and foreign
depositors began, which led to the suspension of payouts by several banks. Panic came in the
following year after the collapse of large German and Austrian banks. Private banks were either
liquidated or survived as a result of financial assistance from the government and the Bank of
Poland. On the other hand, the position of state-owned banks was strengthened. In Poland, however,
the collapse of the banking system never happened, which was not the case in Austria, Germany
and the United States. What is more, the collapse of the monetary system did not occur in the
United Kingdom and the United States (Karpiński, 1968, p. 131).
After the outbreak of World War II, the western part of Poland was incorporated into the Reich.
The złoty was replaced by the German mark and the Polish institutions were taken over by German
financial institutions. On 15 December, 1939 in Cracow, Bank Emisyjny (the Bank of Issue), which
was to issue the Polish currency, was established in Poland. Polish names of the bank and the
money, as well as the Polish management of that institution, were to create an atmosphere of trust
towards the Bank and the issue of money in the Polish society. In fact, the Bank was managed by
the German occupation authorities. The administrative independence of the occupied land from the
Reich and the currency isolation hedging against the depreciation of the German mark created the
basis for free economic exploitation. Germany drew conclusions from the experiences of the First
World War fearing inflation would follow as a result of financing the costs of the war through the
issuance of the money (Skalniak, 1966, pp. 48-47). Credit institutions operating in the General
Government were subordinated to the Banking Supervision Authority that had very broad powers.
Eastern territories were incorporated into the USSR. Credit and savings institutions were
quickly taken over. After Vilnius County was occupied by Lithuania, the litas became the official
currency. Incorporation of Lithuania into the USSR in 1940 resulted in the introduction of the ruble
and the final liquidation of the Polish banking system (Morawski, 2002, p. 25).
Bank Polski (the issuing bank in the pre-war times) was relocated from Warsaw in early
September 1939 with all the gold and currency reserves. At the end of the war, the gold after the
stormy passes was at the disposal of the Bank. In 1943, the United States and Great Britain began
their work to create a new international monetary order after the war. In July 1944, the Bretton
Woods currency conference was attended by the Polish delegation (the London government). The
Bretton Woods agreements were later signed and ratified by the new authorities in Poland. As a
result, Poland became a member of the International Monetary Fund and the International Bank for
Reconstruction and Development (World Bank).
After the Second World War, the banking system was centralised. On January 15, 1945, a state
bank was appointed by a decree of the government - the National Bank of Poland - dependent on

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 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

the ministry of finance and government. It was headed by a president from the nomination of state
authorities.
Beginning from November 1948, the banking reform, in line with the Soviet model, began to
be implemented: banking was to move towards a monopoly - the central bank which was also the
issuing bank, the institution of direct lending to socialised enterprises and the institution supervising
the activities of a few specialised or professional banks. There were six banks left. Such a banking
structure survived without major changes until the late sixties (Wójtowicz and Wójtowicz, 2003, p.
173).
From 1949, when the Postal Savings Bank ceased its operations, Powszechna Kasa
Oszczędności Bank Państwowy (PKO BP) was established. The Act of 2 December 1958 on the
National Bank of Poland (NBP) ordered its legal situation and legalised its organisational status. On
April 13, 1960, the Act on the law of banking was passed which was the first regulation of that type
after the war. It regulated the structure of banking, banking activities, the organisation of banks and
financial system. The Banking Act of June 12, 1975 incorporated both laws that were binding so far
and reorganised the banking apparatus. By administrative decisions, the PKO BP network was
incorporated into the structure of the NBP and then revived in June 1987 as a savings-and credit-
and currency bank serving individuals and legal entities.
The year of 1989 in Poland and other countries of the region brought events that altered the
current configuration of power in the world. In February, the government and the opposition met at
the "round table" reaching an agreement in April. Consequently, the elections to the Sejm and the
Senate were held in June followed by the reconstruction of the market economy under the direction
of the deputy prime minister and the finance minister.
In the first half of 1988, consent was given to the creation of Łódzki Bank Rozwoju S.A.,
which meant a breakthrough in the formed monopoly of socialised ownership in banks. In February
1989, nine depository-and-credit banks that separated from the NBP were launched. Major systemic
changes required statutory regulations. The Laws3 of 31 January 1989 outlined the legal framework
for the activity, establishment and organisation of banks and the activities of a central, state-owned
bank.

3
These are: The Banking Law (Polish Journal of Laws of 1989, No 4, item 21) and The Law on the National Bank of
Poland (Polish Journal of Laws of 1989, No 4, item 22).

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 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

The NBP became a typical central bank with a two-tiered system modelled on market
economies. There were new banks appearing on the market, which was supported by the NBP's
liberal policies, especially the low threshold of the equity of the institution that was planned to
become a bank. After forty years, Bank Gospodarstwa Krajowego resumed its activity. The freedom
of economic initiatives and the new banking law created the possibility of opening more than 80
banks at the beginning of the nineties. Among them, there were over 30 banks whose each majority
share consisted of private capital. One also saw more than 100 independent cooperative banks, more
than 1,500 cooperative banks affiliated with Bank Gospodarki Żywnościowej and the privatisation
of 9 banks that stopped being part of the NBP. The second half of the nineties and the beginning of
the 21st century is the stage of consolidation and merger in the banking market.
Table 1. presents the figures on the number of banks in Poland between 1998 and 2004 based
on the criterion of ownership.

Table 1. Number of banks in Poland between 1998 and 2004

1998 1999 2000 2001 2002 2003 2004

Commercial banks, incl.: 83 77 73 69 59 58 57
with predominance of state capital 13 7 7 7 7 6 6
with predominance of private capital 70 70 66 62 52 52 51
Cooperative banks 1 189 781 680 642 605 600 596

Banking sector in total 1 272 858 753 711 664 658 653

Source: Own work based on Generalny Inspektorat Nadzoru Bankowego, 2004.

As one can observe, in the last seven years, the number of banks in Poland has decreased
almost twice. The biggest impact on that, however, had not bankruptcy, but mergers in the
cooperative banking sector. The exact details of changes in the number of cooperative banks can be
found in Table 2.

Table 2. Reasons for the decrease in the number of cooperative banks in Poland between 1998 and 2004

1998 1999 2000 2001 2002 2003 2004

Bankruptcy 4 0 0 1 0 0 0
Shutdown 6 1 0 0 0 0 0
Merger 96 406 99 35 35 5 3
Acquisition 0 1 2 2 2 0 1

Total 106 408 101 38 37 5 4

Source: Own work based on Generalny Inspektorat Nadzoru Bankowego, 2004.

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 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

3. PROSPECTS FOR DEVELOPMENT OF BANKING SECTOR IN POLAND AT THE

BEGINNING OF THE 12ST CENTURY

Over the last fifteen years, banks in Poland have made significant progress both in terms of
technology and organisation. Not everything that has been happening in Polish banking was good,
but the progress that has taken place in this area certainly distinguishes banking from other sectors
of the economy in a positive fashion. Polish financial institutions do not differ significantly from
Western banks, either in terms of modernity of solutions (customer service systems or the number
and types of offered services) or trust among the public. The rapid development of Polish banking
does not mean that there is nothing left to be improved. On the contrary, much is still to be done in
terms of quality management and efficiency of banks.
The most important factors determining the transformation in banking are (Zawadzka, 2002, p.
10):
- liberalisation and deregulation: deliberate abolition of restrictions by the authorities with
regards to the functioning of financial markets, although the tendency for re-regulation is
observed,
- globalisation consisting in the progressive interdependence of separate, national financial
markets (globalisation of banking systems can also be defined as global action, creation of
products and services for the global financial markets); At the present stage of globalisation,
the expansion of foreign activity is mainly through mergers and acquisitions,
- technological progress including, above all, the development of IT and telecommunications
and the wider use of the Internet.
As it is known, the bank's operations largely rely on the skilful processing of information.
Among the modern communication technologies, the Internet is the most important part of the
solutions used in the banking sector. The possibilities of using it vary from obtaining information,
promoting the bank and its products, communicating with clients, employees, suppliers, and
conducting transactions.
It seems that changes in the banking system will be caused by further, rapid development of
communication tools and systems. Now many banking activities can already be carried out using
electronic banking. In Poland, the number of card transactions has been steadily increasing, and
electronic banking has been a reality for several years now - most of the large banks and more and
more smaller banks (incl. cooperative ones) offer their customers access to their accounts via the
Internet. Some of them lead the so-called virtual banks (Generalny Inspektorat Nadzoru
Bankowego, 2004, p. 9).

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 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

The next step is virtual UMTS kiosks or communicators which will enable banks to become
part of the service infrastructure that will carry out transactions from home or any place of
temporary residence. Sooner or later, new technologies will make it possible to change the nature of
money. The monetary system, as we know it today, will cease to exist (Owsiak, 2002, pp. 98-99).
The development of information technology has affected the bank's operations both by
reducing the amount of data processing effort and by offering the customers more possibilities of
accessing the bank. It should be emphasised that the facilitated access of banks to customers may
become an opportunity for their development but only for those that will extend access to their
clients in time (Zawadzka, 2002, p. 11).
Another important feature in banking is the continuous change in demand among both
individual clients and institutions. The basic trends in demand for banking services among
individuals are as follows:
- decrease in share of savings deposits and increase in purchases of securities, shares in
investment funds due to expected returns being higher than those received from the interest
on deposits,
- increase in the volume of non-cash transactions and consequently the decrease in the volume
of cash transactions,
- increase in the importance of housing finance and loans assigned to this purpose in bank
assets,
- private-banking development: well-informed, well-off customer is not satisfied with the
standard bank offer at the moment and he/she expects privileges and special treatment;
banking products are tailor-made to meet customer needs,
- increase in the number and scope of insurance coverage mainly providing future benefits as
a supplement to the state pension system,
- bank’s increased interest in the management of assets.
In turn, the main trends in the demand for banking services among institutional clients
(companies, local governments, institutions and organisations with legal status, pension and
insurance funds) are:
- increased importance of syndicated loans,
- growing demand for services related to hedging against various types of risk (derivatives,
use of financial engineering),
- intermediation in arranging and placing securities on the market,
- assist in the execution of mergers and acquisitions
- asset management on order,

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 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

- investment advice.
An important prospect for the Polish banking is finally integration with the European Union.
The governments of European Union countries are trying to gradually normalise the majority of the
rules according to which their banking systems operate, while also taking care of their own banks.
EU lawmakers have decided to set up a minimum of common banking rules. In total, more than 30
banking directives have been adopted but there is a considerable scope of bank regulations to be
freely developed by member states.
At the beginning of the nineties, the prospect of Poland's accession to the European Union
contributed to significant changes in banking law and other institutions directly related to the
banking system. The European Council during the Cannes Summit in 1995 adopted the so-called
White Paper which lists the 10 areas of correspondence between the banking systems of the
candidate countries and the banking systems of the Member Country (Dobosiewicz, 2003, pp. 67-
70):
- issuing licenses for banks,
- rules of conducting banking business and freedom to provide services and appointing bank
authorities,
- defining the bank's equity (the basis for the calculation of prudential norms),
- introduction of standards for solvency ratio,
- introduction of a bank deposit guarantee system in line with EU standards,
- introduction of rules that counteract the practice of money laundering in banks,
- introducing EU rules for the preparation and publication of financial statements as well as
for the valuation of assets,
- prudential standards that with regards to the relation between the bank's capital and the risk,
- prudential standards for maximum concentration of loans and other receivables,
- consolidated supervision of banks and banking groups.
Major changes in the Polish legislation have been made. Smaller changes are made practically
every year. One of the issues is that EU standards do not remain unchanged as they are subject to
constant adjustments.

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 Short history of banking and prospects for its development in Poland at the beginning of the 21 st century

REFERENCES

Baka, W. (2001). Bankowość Centralna. Funkcje-Metody-Organizacja. Warsaw: Zarządzanie i

Finanse.
Decree of December 7th, 1918 (Polish Journal of Laws 1918 No. 19 item 56).
Dobosiewicz, Z. (2003). Bankowość. Warsaw: PWE.
Generalny Inspektorat Nadzoru Bankowego (2004). Sytuacja Finansowa Banków w 2002 roku.
Synteza. Warsaw.
Grodek, A. (1936). Idea banku narodowego. Geneza Banku Polskiego 1763-1828, Warsaw: Szkoła
Główna Handlowa.
Herodotus, with an English translation by A. D. Godley (1920). Cambridge: Harvard University
Press.
Karpiński, Z. (1968). Ustroje pieniężne w Polsce od roku 1917. Warsaw: PWN.
Korzon, T. (1975). Odrodzenie w upadku. Wybór pism historycznych. Warsaw: PIW.
Krzyżkiewicz, Z. (2002). Podręcznik do nauki bankowości. Warsaw: Zarządzanie i Finanse.
Leszczyńska, C. (2004). Rzut oka na dzieje polskiej bankowości centralnej. Warsaw: Wyd. NBP.
Morawski, W. (1998). Słownik historyczny bankowości polskiej do 1939 roku, Warsaw: Muza.
Morawski, W. (2000). Przed rozbiorami. In: Historia bankowości w Polsce. Gazeta bankowa, April
18-24, 2000.
Morawski, W. (2002). Zarys powszechnej historii pieniądza i bankowości. Warsaw: Trio
Owsiak S. (2002). Sektor finansowy w Polsce. Warsaw: PWE.
Pelc, J. (1935). Ceny w Krakowie w latach 1369-1600. Lviv: Instytut Popierania Polskiej
Twórczości Naukowej.
Proniewski, M. and Niedźwiecki, A. (2003). Integracja gospodarcza w zarysie. Białystok: Wyższa
Szkoła Finansów i Zarządzania w Białymstoku.
Skalniak, F. (1966). Bank Emisyjny w Polsce 1939-1945. Warsaw: PWE.
Woyzbun, S. (1928). Historia bankowości w zarysie. Warsaw: Oszczędność.
Wójtowicz, G. and Wójtowicz, A. (2003). Historia monetarna Polski. Warsaw: Twigger.
Zawadzka, Z. (2002). Zagrożenia i szanse dla banków na początku XXI wieku. Bank i Kredyt, nr
10.

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 ZARYS HISTORYCZNY ORAZ PERSPEKTYWY ROZWOJU BANKOWOŚCI
W POLSCE NA POCZĄTKU XXI WIEKU

Streszczenie: Artykuł prezentuje genezę oraz rozwój polskiego systemu bankowego. Część pierwsza
jest poświęcona historii bankowości na świecie. Przedstawione zostały osiągnięcia w dziedzinie
pieniądza i bankowości od czasów antycznych po wiek XX. W części drugiej autor opisuje
wydarzenia, które ukształtowały obecny stan bankowości na ziemiach polskich, na przestrzeni
ostatnich 600 lat, od czasów Kazimierza Wielkiego po lata współczesne. Szczególna uwaga została
poświęcona perspektywom rozwoju sektora na początku XXI wieku, gdy Polska znajduje się o krok
od przystąpienia do struktur Unii Europejskiej. Tej tematyce jest poświęcona część trzecia
opracowania.

Słowa kluczowe: bankowość, historia bankowości, banki

Łukasz Kuryłowicz – Wydział Zarządzania, Politechnika Białostocka w Białymstoku

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