Monetary policy in Poland often faces some major problems, and their solution will be a prerequisite of this (and even of the macroeconomic) policy efficiency in the forthcoming years.

The problems include:

1. very high overliquidity of the commercial banks sector;
2. high level of the budget deficit, and insufficient transparency of the fiscal policy;
3. difficulties with the application of the monetary analysis quantitative methods.

The overliquidity of the commercial banks sector, reflecting the value of NBP net claims towards the sector, arises from a rapid growth in gross official reserves. The phenomenon not only reduces effectiveness of the monetary policy but also threats its stability and increases related fiscal costs. The overliquidity problem will be resolved as soon as the flow of excessive supply of the reserve money, resulting from a fast increase in foreign currency reserves, is halted, and then absorbed by a growing demand. Therefore, control of gross official reserves' growth requires enhanced floating of exchange rate up to its full float.

Amongst major elements of the fiscal policy in Poland that affect adversely the pursuit of the monetary policy there are the following: the level of the budget deficit, the structure of deficit financing, limited transparency of the fiscal policy.

The magnitude of the budget deficit effects depends on the value of deficit, scale of financing by the banking sector and the level of monetization of the economy. The impact of all the above factors is much stronger in the Polish economy than in developed market economies. Thus, in the Polish economy, the same budget deficit in relation to GDP results in much serious monetary consequences than in developed economies. That is, among others, why the restricitveness of the monetary policy for a given budget deficit level must be much higher in Poland than in developed economies. This higher level of restrictiveness of the monetary policy must be, in turn, an incentive for an increased inflow of foreign portfolio investment, thus enhancing the problem of the banking sector overliquidity.

Fast liquidation of the budget deficit, subsequent accumulation of growing excess funds and their utilization for an earlier repayment of the external debt would generate a stream of necessary capital outflow abroad, thus, reducing excessive capital account of the balance of payments. In the context of a floating exchange rate, it would reduce the appreciation pressures and foreign currency reserves growth rate, and therefore, the overliquidity of the banking sector.