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FX mortgages threaten Poland's financial system, governor says

Kitco News

WARSAW, July 2 (Reuters) - The legal risk connected to foreign currency mortgages has become the main threat to the stability of Poland’s financial system, Central Bank Governor Adam Glapinski said on Friday.

Thousands of Poles took out loans in Swiss francs more than a decade ago to take advantage of lower interest rates but faced far higher costs when the value of the Swiss currency shot up. Many have taken banks to court over clauses they say are abusive.

Banks and mortgage holders were left in limbo in May when the Supreme Court delayed guidelines on how lower courts should treat the cases.

The court asked institutions including the central bank, financial regulator KNF and the human rights ombudsman to submit opinions on the issue.

“The legal risk of the portfolio of foreign currency loans has grown and has recently become the main threat to the stability of the domestic financial system,” Glapinski said in answer to questions from the court.

“To date, the lack of a uniform line of case law is creating uncertainty that is detrimental to both banks and borrowers, as it makes financial planning for the future difficult for both parties.”

The next sitting has not yet been set, but the First President of the Supreme Court Malgorzata Manowska has said it should be in September. (Reporting by Alicja Ptak; Editing by Philippa Fletcher)

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