Polish central bank chief weighs gold sales to fund defense

Poland’s central bank chief laid out a proposal to generate as much as 48 billion zloty ($13 billion) from the sale of gold reserves to finance defense spending as part of a plan backed by the nation’s president, according to people familiar with the matter.

Governor Adam Glapinski outlined the proposal in a meeting with President Karol Nawrocki on Wednesday as the head of state announced he’d seek an alternative to a European Union program that’s opposed by the US. Nawrocki and his aides have criticized the EU’s €150 billion ($174 billion) loans-for-weapons project as a costly endeavor that would jeopardize ties with Washington.

The new funding initiative faces legal and political hurdles in Warsaw. The central bank is prohibited from directly funding the government, but it’s required to transfer almost entire annual net income to the budget. In addition, Prime Minister Donald Tusk is firmly committed to tapping Warsaw’s €44 billion share of the Security Action for Europe program.

Glapinski told the president that the National Bank of Poland could generate the profit by selling down some of its roughly 550 tons of gold reserves, which it could then buy back, the people said, on condition of anonymity as discussions take place behind closed doors.

Another 12 billion zloty could come from other sources at the central bank and provide as much as 60 billion zloty in additional defense financing this year alone, one of the people said.

Eventually, the total value of the plan would rise to 185 billion zloty, roughly equivalent to SAFE loans that would be allocated to Warsaw, according to the president.

Speaking to reporters on Thursday, Glapinski confirmed that he’s working on such a plan but didn’t reveal its specifics.

Trump ally

The Polish president’s opposition to the EU’s SAFE program aligns with the position of Donald Trump’s administration, with which Nawrocki has cultivated strong ties. The US has derided the plan’s preference for procurement within Europe as a risk to joint defense.

“If we believe that American F-35 aircraft are good for the Polish armed forces and are the most technologically advanced in the world, then we could purchase them from the Polish SAFE 0% program,” Nawrocki said on Wednesday, using a term to describe the plan being prepared with the central bank.

Glapinski last week met with the US envoy in Warsaw, Tom Rose, and the meeting included discussions about the “growing role of gold in central bank reserves worldwide,” the central bank said on X.

The governor didn’t go into detail on Wednesday about the central bank’s financing role, but ruled out deploying reserves or a bond-buying program. The proposal may require drafting special legislation and needs to be done in cooperation with the government, Glapinski said.

Biggest buyer

Poland’s central bank has been the world’s biggest reported buyer of gold. Management board member Artur Sobon told Bloomberg News in January that it plans to increase holdings to 700 tons as it braces for more of the geopolitical instability that has driven prices to record highs.

The head of the presidential office, Zbigniew Bogucki, told state newswire PAP late Wednesday that the plan could be financed from gold reserves in the next five years, but he didn’t elaborate on the mechanics.

Another option would be to change the law to allow the central bank to revalue gold reserves to generate profit — and draft legislation specifying that it would be allocated to defense spending, one of the people said. It remains unclear whether the profit could be paid out during the year, which may require further legal changes.

Glapinski told his monthly news conference on Thursday that the proposal wouldn’t lead to a shrinking of the bank’s reserves. He said details still needed to be worked out in meetings with top officials and that his bank will be able able to transfer “several dozens” of billions of zloty in profits a year to fund Poland’s defense.

He added that if the right type of legislation is passed, which would require consultations with the European Central Bank, the amount could be even bigger.

(By Piotr Skolimowski and Agnieszka Barteczko)