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(Bloomberg) -- Poles may end up paying less on their Swiss franc-denominated mortgages after Switzerland ended its currency cap last month, central bank Governor Marek Belka said.

The Swiss National Bank’s move on Jan. 15 sent the zloty tumbling 22 percent against the franc, swelling monthly home- loan payments for about 563,000 Polish families and weakening valuations of the country’s most-exposed commercial banks. Poles took on $35 billion in franc mortgages, mostly before the 2008 global crisis, creating a currency risk that Belka called a “ticking time bomb” last year.

Belka said the reduction in interest rates by the SNB, which accompanied the surprise currency-policy change, would eventually outweigh the exchange-rate adjustment. Finance Minister Mateusz Szczurek urged banks during the Davos summit last month to pass on the savings from negative Swiss interest rates to their customers.

“Eventually, monthly mortgage payments may be lower,” Belka said at a central bank news conference in Warsaw today.

Household demand in Poland may weaken as a result of the Swiss franc’s appreciation, policy makers said in a statement after holding interest rates unchanged, as predicted by 34 of 36 economists surveyed by Bloomberg.

Franc Ticker

The debate over what regulators and Polish banks should do about Swiss-franc mortgages is a “destabilizing factor,” which argued against lowering borrowing costs now, the governor said. The plight of Polish families with franc loans has dominated the country’s media. The main business news network, TVN24BiS, puts a live ticker of the franc exchange rate on its screen.

While most Polish banks stopped granting franc-denominated home loans after the zloty’s plunge in 2008, mortgage holders in the country of 38 million are still paying off debt incurred in previous years when they saw the franc as a way to borrow cheaply as the zloty strengthened.

The zloty stood at 3.9573 per franc at 7:11 p.m. in Warsaw, compared with 3.5445 a day before the SNB’s move. In August 2008, the month before the collapse of Lehman Brothers Holdings Inc, the Polish currency traded below 2 per franc.

Andrzej Jakubiak, the country’s financial supervisor, said on Tuesday he’s considering a voluntary plan to convert franc mortgages into zloty loans that may cost the banking industry as much as 25 billion zloty ($6.9 billion) over 20 to 25 years.

“This proposal hasn’t been discussed” with the monetary authority, Belka said. “From the central bank’s point of view, the most important thing is the stability of the banking system.”

--With assistance from Piotr Skolimowski and Maciej Martewicz in Warsaw.

To contact the reporter on this story: Piotr Bujnicki in Warsaw at pbujnicki@bloomberg.net To contact the editors responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net Pawel Kozlowski, David McQuaid

Bloomberg