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(Bloomberg) -- Poland’s finance minister will meet local bankers and regulators next week to assess the impact of a surging Swiss franc as the main opposition party called on the government to offer relief to borrowers in the currency.

The Financial Stability Committee, which includes representatives from the government, central bank, and financial regulator, will meet on Jan. 20, its chairman and Finance Minister Mateusz Szczurek said late yesterday. The main opposition Law and Justice party today called on the government to allow borrowers to pay off their Swiss-franc loans at the Jan. 14 exchange rate.

Catapulting the issue into the spotlight in Poland is the Swiss National Bank’s unexpected decision yesterday to scrap its minimum exchange rate. Many Poles and Hungarians opted to borrow in francs in the runup to the 2008 financial crisis because loan rates were lower than for local currencies.

“When an earthquake hits, the government has to act,” Pawel Szalamacha, a Law and Justice parliament member, said at a news conference today. “We propose to allow Poles to pay off their loans at an exchange rate from before the earthquake.”

The finance minister sought to allay concerns that the higher cost of loan repayments will unsettle banks. There’s “no risk to the country’s financial stability,” Szczurek told reporters in parliament.

Discuss, Exchange

The committee may “discuss and exchange views” about potential steps on the currency market following the zloty’s slide of almost 20 percent against the franc, according to Szczurek. The chief executive officers of commercial banks that were “most involved” in extending foreign-currency loans will also attend the meeting, he said.

The plight of Polish mortgage borrowers may become a hot- button issue in the runup to this year’s general election. Prime Minister Ewa Kopacz is already on the defensive as she battles protests from miners and opposition to the government’s plan to overhaul the unprofitable coal industry.

“There’s a growing political risk that some controversial solutions will be bounced around before the election,” Piotr Bujak, a senior economist at PKO Bank Polski SA, said by phone from Warsaw. “This is bound to become a campaign issue.”

The challenge is hard to overlook during this political cycle because higher payments on Swiss-franc loans may affect about 1.5 million people, or 5 percent of the electorate, according to PKO.That includes three government ministers and three of the finance minister’s eight deputies, their disclosures show.

Toxic Loans

Regulators have sought to wean eastern European banks from extending foreign-currency loans since the practice pushed some countries to the verge of default during the credit crisis.

The effort has been most pronounced in Hungary, which last year ordered that $14 billion of foreign-currency household mortgages, mostly denominated in Swiss francs, be converted into forint as part of a drive by Prime Minister Viktor Orban to reduce his country’s exposure to currency swings.

Polish lenders had 131 billion zloty ($35 billion) of Swiss-franc mortgages on their books as of end-November, 46 percent of total home loans, according to data from the country’s financial-market supervisor.

Central bank Governor Marek Belka has called mortgages in francs a “ticking time bomb” and urged lenders to phase them out before lawmakers decide to force a swap that may cause losses.

“Swiss-franc mortgages will be an important element of the general elections campaign in the coming months,” Piotr Matys, an emerging-markets foreign-exchange strategist at Rabobank International in London, said by e-mail today. “Any populist measures that have the potential to cause losses in the banking sector would dent demand for Polish assets among foreign investors.”

--With assistance from Konrad Krasuski in Warsaw.

To contact the reporters on this story: Piotr Skolimowski in Warsaw at pskolimowski@bloomberg.net; Maciej Onoszko in Warsaw at monoszko@bloomberg.net To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net; Wojciech Moskwa at wmoskwa@bloomberg.net Paul Abelsky, Pawel Kozlowski

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