What is the banking system and what functions does it perform?

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A bank is associated rather simply and narrowly - with a place where money is stored, with loans and deposits. The banking system in Poland, however, is not a network of bank branches, but a large and precisely regulated structure that performs specific functions.

What is the banking system?

The banking system can be defined as a logical and coherent whole, made up of banking and financial institutions of a given country together with the applicable standards. As regards the legal regulations in Poland in this respect, the most important acts can be mentioned:

  • Banking law,
  • about the National Bank of Poland,
  • on covered bonds and mortgage banks.


Basically, there are two models of the banking system:

  • Anglo-Saxon, which is characterized by a strict separation of deposit and credit banking from investment banking,
  • German-Japanese (also known as continental) based on the concept of a universal bank, combining deposit and loan banking with investment banking.

What does the banking system in Poland consist of?

The most important elements of the banking system include:

  • central bank, i.e. "Bank of banks" - in Poland it is the National Bank of Poland;
  • The Polish Financial Supervision Authority (KNF), which supervises the banking sector, capital, insurance and pension markets, while exercising supervision over electronic money institutions, institutions and payment service offices and controlling the cooperative credit union sector.
  • Bank Guarantee Fund (BFG) dealing with the management of the deposit guarantee system in order to ensure security and stability of the financial market, similarly to the Polish Financial Supervision Authority;
  • commercial and cooperative banks.


The authorities of the NBP are:

  • President of the National Bank of Poland,
  • The Monetary Policy Council,
  • NBP Management Board.

The banking system - what are its functions?

The banking system performs the following functions:

  • issue - in Poland, only the NBP has the right to issue currency, i.e. notes and coins, which are legal tender; moreover, zloty and grosze introduced into circulation have the statutory power to release all obligations and no one may refuse to accept them as payment;
  • regulatory - consisting in controlling the money supply, taking into account the demand for it, because the central bank cannot create "empty" money, without the cover in goods and services;
  • deposit and credit, which is related to the mechanism of converting deposits into credits and loans,
  • settlement - money is transferred via the bank from debtors to creditors (debiting one account and crediting the other),
  • allocation - thanks to it, it is possible to transfer funds from less to more effective areas of the economy and economic entities,
  • financial and advisory services - consisting in securing clients' interests with the support of relevant advisory services,
  • stimulating - influences the development of local entrepreneurship, due to the fact that the bank is a capital donor.