Best Bitcoin Exchange for Poland

It has been known for a long time that the Polish Ministry of Digital Affairs is working on further research into virtual currencies. The Minister is particularly interested in the Bitcoins technology. As part of this, a plan was worked on for a long time on how this technology could be regulated and used meaningfully. His efforts finally bore fruit last week. The authority presented a detailed plan on how Poland could take advantage of Bitcoins’ opportunities in the future as part of its digital expansion.

The published paper “From Papery to Digital Poland” gives a deep insight into the Ministry’s plans. It is already clear that Poland will focus more on selected public services in the future. These include electronic identification and the possibility of cashless payment. For both services, the ministry has pledged to make greater efforts in the future.

An optimal solution for everyone

However, the ministry is clearly focusing on the technology behind the Bitcoins and other digital currencies. The so-called blockchain should help to become competitive again within Europe. Plans have already been made to adapt the legal framework in favour of development. Economic strategies are currently being developed to increase the competitiveness of digital projects. The regulations and precautions that need to be taken are currently being examined. The Ministry is working at full speed on various draft laws. The legislation is to be adapted in future in such a way that the Polish government is given the necessary control over all digital currencies. However, an accepted middle way has to be found which both meets the needs of the government and guarantees the protection of consumers. There are some challenges that need to be overcome in order to find an optimal solution that provides benefits and opportunities for all stakeholders.

Intensive work during rest

This blockchain-friendly attitude of the Polish government has been evident for some years now. Already in 2013, the Polish Ministry of Finance officially declared that Bitcoins are legal in Poland. After that, however, the government remained largely calm on this issue. The government did not discuss digital currencies in the press afterwards. Below the surface, the topic never lost its importance for the Polish government. Until February of this year a strategy paper on blockchain technology was worked on with vigour. This was published by the Ministry of Digital Affairs in February and dealt in depth with Bitcoins and other digital currencies as part of the aspired Internet of Things.

Discussions are continuing

The basis for this comprehensive strategy paper is a lively exchange between the Polish Ministry of Digitisation and numerous IT start-ups. The authority benefited from the intensive knowledge of the respective startups dealing with Bitcoins and Blockchain. Despite the results of the strategy paper and the official declaration of the Polish government, the Authority’s discussions with the companies are continuing. Further papers are currently being planned. Experts expect the next results of this discourse in July this year. Further developments regarding digital currencies will therefore remain exciting.

People’s Republic of Poland

In March 1963, Poland and the Federal Republic of Germany set up trade missions in the other country. After Poland’s western border was secured with the Federal Republic by the Warsaw Treaty in December 1970, the government believed it could use the relief of the population to raise prices and increased the prices of consumer goods by 13 to 38 percent. The population revolted. In 1970, foreign debt amounted to 1.2 billion US dollars. After the revolt, the government initially hesitated to issue further price increases; on June 24, 1976, it had to increase prices drastically. It wanted to raise prices for butter and cheese by 50%, for meat by 68% and for sugar by 100%. After strikes and demonstrations again took place, the government declared that they were only plans.

In 1980 the foreign debt amounted to 24.1 billion US dollars; a large part of the loans taken out had flowed into consumer spending. On 1 July 1980 meat prices were increased again. In the subsequent riots, the union Solidarność was formed.

Transition from a planned economy to a market economy

The first reforms began in 1988 with the aim of transforming Poland’s centrally planned economy into a market economy. In contrast to the other socialist countries, however, by 1988 about 20 percent of companies were in private hands. On January 1, 1989, the law made it easier to set up private companies and register commercial activities. In March 1989, the opportunity was created to set up private exchange offices. On 1 August 1989, the central pricing of food products was abandoned. At that time, these products were hardly offered in shops, but sold mainly at weekly markets and bazaars.

In October 1989 the so-called Balcerowicz Plan was presented by Leszek Balcerowicz. The plan provided for a rapid transformation of the socialist economic system into a market economy. A debt moratorium, achieved by Balcerowicz, gave Poland the necessary freedom of action for the reforms. On December 27, 1989, the Sejm passed ten economic laws presented by the government ten days earlier. These laws, drawn up under the direction of Balcerowicz, are considered to be one of the most important cornerstones of economic reform. State revenues fell sharply in 1990 and 1991 due to the general recession. Inflation was 585 percent in 1990, but fell to 160.4 percent in 1991. Industrial production fell by 27 percent, real wages by 30 percent. The Warsaw Stock Exchange (GPW) opened on April 16, 1991. On January 1, 1995, the Złoty was revalued from 10,000 old to one new Złoty (PLN) within the framework of a currency reform.

With the transition to a market economy, the importance of mining also declined. The significance of the industry as a source of foreign exchange waned and it had to face competition. In 1989 there were 404,000 people working in mining, three years later there were only 350,000.

In 1989, 5.1 million people were employed in agriculture, which in 1990 produced five percent of the gross domestic product. By 2002, the number of people employed in this sector had fallen to 2.9 million, and in 2004 they accounted for only about three percent of the gross domestic product. However, a large proportion of those who work as farmers are only registered as such in order to benefit from subsidies; around a quarter also pursue other activities. As a result of the economic reforms, the proportion of farmers who produce only for self-sufficiency fell sharply.

Development since 1989

Many Germans were surprised after 1989 that the conditions for the new capitalist system in Poland had already been created during the communist governments. Again and again hundreds of thousands of self-employed people had already acquired the tools for their later entrepreneurship before the system change. These practical “management seminars” were not enjoyed by GDR citizens. Even without massive help from the West, Poland’s economy recovered faster after the collapse of the communist system than that of East Germany or other states of the former Eastern bloc.

The long-lasting success of Poland’s economy in comparison with other post-communist states ensured that the term Polish economy became more and more a synonym and a stylistic variant of the term real Polish economy. However, in February 2015 a Polish city guide in Warsaw complained about German tourists: “Poland as a success story? Many simply don’t believe that.”

In the latest studies on the Polish economy, the positive assessment of the Polish economy is relativized. In an article entitled “How Lost Is Poland” in the September 2016 issue of the business magazine Capital, Nils Kreimeier criticises the Polish government for taking an “anti-German and anti-EU course” and thus “shaking the two pillars that fuelled the economic boom”. Consequence: “The first indicators are already pointing downwards”.

Public debt

According to Polish statistician Teresa Malecka, Poland was in debt with 34% of its national income in 1929. The main creditors were the USA, which accounted for 38.2% of total debt in 1930. The American share of government debt was 69% in 1930 and 82.8% in local government debt. Malecka draws the conclusion that “against all odds” the role of American capital in Poland could not have been negative, since the debt was not very large and it is not necessary, in her opinion, to attribute political motives to American capital groups in their activities in Poland.

Poland’s public debt ratio increased between 2008 and 2013 as a result of the financial crisis. While the government debt of 600.8 billion Złoty corresponded to a government debt ratio of 47.1 % at the end of 2008, the government debt ratio reached 57.1 % at the end of 2013, given a debt level of 934.4 billion Złoty in the meantime. In 2014, the debt ratio fell significantly because the state reformed pension funds. This means that the Polish government again has more financial leeway, as the constitution would force it to take serious measures to avoid a further increase if the public debt ratio were to exceed 55 %. After exceeding a second limit of 60%, the government would be forced to balance the budget without further delay.

Capital market

The development of the Polish capital market began in the Middle Ages due to the immigration of merchants from northern Italy and the Netherlands to the guilds of large trading cities. Thus the Polish word for stock exchange Giełda comes from Gilda, which in Central High Polish corresponded to the Middle High German Guild. Exchange trading in bills of exchange and other promissory notes began around 1300. In the Polish-Lithuanian aristocratic republic, merchants received certain trading privileges for exchange trading, which can be regarded as the first stock exchange regulations. There were stock exchanges in Gdansk (Artushof), Krakow, Poznan, Zamość and Warsaw. Since the 18th century, Warsaw merchants, for example, have recorded their meetings twice a week. The first Polish joint-stock companies also date from this period, with the oldest preserved Polish share being that of Kompania Manufaktur Wełnianych w Warszawie from 1768. The first modern Polish stock exchanges were established in Warsaw and Krakow in 1817 and 1818. The subject of trading were bonds and shares. In the Second Republic there were already seven stock exchanges in Warsaw, Krakow, Poznan, Łódź, Katowice, Lviv and Vilnius. At the beginning of the Second World War, the Germans and the Soviets closed all of them. Only after 50 years did the Polish capital market reappear in 1989. The Warsaw Stock Exchange was newly established in 1991. In 1996, the trading platform CeTO (Centralna Tabela Ofert) was added as a regulated non-listed market, also based in Warsaw.

The Warsaw Stock Exchange is the largest exchange in Central Eastern Europe and one of the fastest growing in the world. In 2005 it overtook the Vienna Stock Exchange in terms of market capitalization. The capitalization of the Warsaw Stock Exchange is almost USD 300 billion. In 2004 almost 40 IPOs took place on the stock exchange, which made it the second largest IPO in Europe after the London Stock Exchange, and PKO BP’s IPO of almost USD 2 billion was one of the five largest in Europe in 2004. Foreign issuers and several foreign brokers have also been members of the exchange since 2004, such as MOL, Credit Austria, SkyEurope, Raiffeisenbank, etc. The total number of listed companies is almost 300.

The investor audience is divided into three roughly equal parts: Polish private investors, Polish institutional investors and foreign institutional investors (of which 76% come from the UK, 5% from the US, 3% from Italy, 2% from Germany and 1% from France). The fastest-growing segment is the share of Polish institutional investors, as one third of Polish employees’ pension contributions are paid into the capital market via pension funds. After the global bear market in 2000-2002, the GPW has been in a boom phase since 2003. In recent months, the WIG (Warszawski Indeks Giełdowy – main index) and the WIG 20 (index of the 20 large Golden Shares) have consistently reached new all-time highs. Further indices of the stock exchange are the MIDWIG (medium-sized AGs), WIRR (small AGs), TechWIG (technical AGs), WIG-PL (large and medium-sized AGs based in Poland), NIF (investment funds) as well as the sector indices WIG-Banks, WIG-Bau, WIG-IT, WIG-Medien, WIG-Lebensmittel and WIG-Telekommunikation.

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