Poland's gold to strengthen its defense

Poland's central bank is considering using part of the sharp rise in gold reserves indirectly for defense spending. The head of the central bank, Adam Glapiński, explained on Tuesday that the bank is prepared to work more actively with its gold holdings in future and to mobilize valuation gains from the precious metal for security policy purposes.

According to the National Bank, the unrealized increases in the value of the gold reserves currently amount to around 197 billion złoty (around 46 billion euros). This potential could - spread over several years - contribute to financing military investments.

Gold as a security reserve - and as a source of finance

The move comes at a politically sensitive time. President Karol Nawrocki has until 20 March to decide whether he will sign the government's law to implement the European SAFE program. The EU programme is intended to provide member states with loans for joint arms procurement.

Nawrocki, who is politically close to the national conservative opposition, sharply criticizes the European mechanism. The repayment of the loans would extend far into the future, and he also fears stronger political influence from Brussels.

Instead, the president proposes a national solution: a defense investment fund at the state development bank BGK. Part of the financing could come from the value gains of Poland's gold reserves.

Central bank signals willingness

Central bank chief Glapiński explained that the central bank is prepared in principle to realize part of these profits. This would not mean that the reserves would shrink. Rather, it would merely change their composition.

"When we sell gold, we exchange it for dollars," said Glapiński. "The total value of the reserves remains the same - only their structure changes."

The idea: part of the gold would be sold, the valuation gains would flow into the state budget or the proposed defense fund. Later, the central bank could buy back the same amount of gold.

Growing gold reserves

Poland has significantly increased its gold reserves in recent years. At the end of February, they amounted to around 570 tons - an increase compared to 550 tons at the end of the previous year. In the long term, the central bank is even aiming for holdings of 700 tons. In total, the central bank's currency reserves currently amount to more than one trillion złoty, around a third of which is in gold.

The proposal is likely to further intensify the political debate. Prime Minister Donald Tusk's government is relying on European SAFE funding, from which Poland could receive around 43 billion euros - the largest allocation within the EU.

Nawrocki and his political allies, on the other hand, are warning of rising debt and see national control over defense investments at risk. It remains to be seen whether the president will ultimately sign the law or veto it. The government has already announced that it will prepare alternative financing channels in this case.

Glapiński emphasized that possible gold transactions would be carried out carefully and gradually. The aim is to avoid turbulence on the financial markets and not to create additional inflation risks. All measures would be implemented within the legal mandate of the central bank and in accordance with European law.

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