In the second half of the 80s Poland s economic situation deteriorated. In 1987 there were clear symptoms of payment backlogs and inflation. The prevailing taxation system imposing an 80% rate on profits in the case of BGŻ and 65% in the case of cooperative banks significantly hindered the development of both BGŻ and the cooperative banking sector. Changes were indispensable. April 1988 was very important for BGŻ. Pursuant to a regulation issued by the Council of Ministers, 9 commercial banks, referred to as credit banks, were established. The establishment of these banks created an opportunity to stimulate competition between banks. Pursuant to an order issued by the President of NBP, Bank Gospodarki Żywnościowej, as one of the first in Poland, was given the powers of a foreign currency bank. It was also one of the first to start cooperation with the World Bank, via NBP84. In 1988, based on the resolutions of the Ninth National Convention of Delegates, BGŻ extended the scope of its banking services to include deposits for natural persons and foreign currency activity. From then on, BGŻ from a financial head office of cooperative banks became a major bank in the retail services market85. These changes were inevi- table due to the necessity to adapt BGŻ to the requirements of competition. Based on the principles of the general economic and financial system, two new funds were established. The foreign currency fund, which was to accumulate proceeds coming from its own FX operations, allocations of foreign currencies in the form of limits from the payment bal- ance and other sources. The objective of the FX fund was to finance the purchase of specialist machinery and equipment, spare parts and consumables. The second fund was a technical and economic progress fund. The fund was supplied from charges on oper- ating expenses. The monies accumulated in the fund were to be used to finance research, implementation and development work as regards technical and organizational prog- ress86.

Community and self-government activity

The tasks of a cooperative (audit) association, whose functions were discharged by BGŻ, included conduct of not only consulting, instruction and training activity, but also cultural, educational and publishing activity to cooperative banks. Only in 1984, in cooperative banks, there were 203 courses and nearly 2 thousand lectures and discussion meetings devoted to their activity. BGŻ was also engaged in activities associated with preparation of future staff for cooperative banking. It assumed patronage over secondary schools, among others in Garwolin and Czernichów, and established cooperation with universi- ties: Central School of Planning and Statistics (currently Warsaw School of Economics), Warsaw University of Life Sciences (SGGW) and Agricultural Academy in Kraków (cur- rently Agricultural University in Kraków). BGŻ also issued a monthly publication entitled

84. Calendar of events., op. cit., p. 36.

85. ABGŻ, file no. 1392, Historical background.

86. Calendar of events., op. cit., p. 36-37.

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