Poland leads the EU field for finance

More than 1,800 academic, political and business leaders are gathering in the Polish mountain resort of Krynica to discuss Central Europe's economy, and its integration with Western Europe, and the bloc's neighbours to the East.

Over its 20-year lifespan, the Krynica economic forum has developed from being a mainly Polish event to one with significance for the whole of Europe. And that's no accident. Poland has an active ambition to become the most important financial centre for the region.

The decision, in 1991, to house the new Warsaw Stock Exchange in the former communist party headquarters was one charged with symbolism. And now that stock exchange is racing ahead of its nearest rivals. The value of domestic companies listed in Warsaw is now 55% percent higher than on the Vienna Börse, and more than double Athens' total. Warsaw is even closing the gap on the whole consortium of exchanges (including Budapest, Prague and Lubljana) owned by the Vienna Börse.

"It would be very nice and very helpful to the Polish economy to become the 'London of the East'", says Ludwik Sobolewski, CEO of the exchange, which has now moved next door. "Or rather, of Central and Eastern Europe, because that is how we define the area where we would like to be a financial hub, and a stock exchange which is not a local one".

The growth of the Warsaw exchange is not just a result of the country's sustained growth rate. It is also a product of the centre-right government's concern to cut Poland's deficit by privatising large, state-owned enterprises. IPOs by insurer PZU and energy giant Tauron made a big splash this year, attracting both individual players and foreign investors, who accounted for a record 47% of total trading in the first half of 2010.

The development of the financial services sector in Warsaw has also been fuelled by the exchange's alternative market, New Connect, which has allowed small and medium-sized businesses to find capital. Anna Nietyksza of Eficom, a company that helps other businesses prepare their flotations on new connect, puts it simply: "We're going through a boom."

The Warsaw Stock Exchange itself is due to be floated in November. Many are whetting their lips at this prospect, but some analysts are sceptical. "I would support a different scenario", says Pawel Szalamacha, a former deputy treasury minister who now heads the Sobieski Institute think tank. "The ownership of the exchange should be spread among various private institutions, but it should not go public. This would avoid creating the strange situation where the stock exchange, in order to increase its short term profits, relaxes rules at the expense of the safety and reliability of the market". The current government, however, has preferred to take a gamble.