(Adds Polish c.bank governor comments, more background)
ZURICH, Nov 7 (Reuters) - The Swiss National Bank said on Friday it would cooperate with Poland's central bank to provide Swiss franc liquidity by setting up a temporary euro-Swiss franc swap agreement.
The long-expected move aims to replenish the supply of Swiss francs, popular among Poles taking out mortgages, to the Polish banking sector, which has suffered a shortage of the currency.
"This facility ... will allow the NBP to provide Swiss franc funding to banks in its jurisdiction in the form of foreign exchange swaps," the SNB said in a statement.
The Narodowy Bank Polski (NBP), Poland's central bank, will join the weekly euro-Swiss franc foreign exchange swap operations of the SNB and the Eurosystem from Nov. 17.
"This will build greater confidence and calm on the markets," Polish central bank governor Slawomir Skrzypek said.
The Polish financial watchdog launched an investigation into a local bank which ignored a recommendation to stop lending in foreign currencies. The regulator also called on Polish banks that are having problems funding loans in Swiss francs to stop offering them.
Many lenders in the region have tightened rules for loans in foreign currencies in recent weeks following the global financial crisis.
That led some banks to delay paying out Swiss franc mortgage loans to customers who have already signed their loan contracts, according to local media reports.
The SNB will provide the NBP with Swiss francs against the euro, while the NBP will provide the Swiss francs to its counterparties against the Polish zloty, the SNB said.
Operations will be conducted with a term of seven days at a fixed price. Longer term transactions could also be offered from time to time, it said.
"This measure will be in place as long as needed, but at least until January 2009," the SNB said.
Earlier this month, the SNB and the European Central Bank announced three-month euro-Swiss franc foreign exchange swaps adding to a recent string of measures to pump Swiss franc liquidity into the market.
In October, the ECB and the SNB launched one-week swaps providing franc liquidity to banks in the euro zone and allowing banks in Switzerland to get franc funds without the usual strict collateral.
For a detailed statement, click on http://www.snb.ch/en/mmr/reference/pre_20081107/source/pre_20081 107.en.pdf (Reporting by Katie Reid and Sam Cage; Editing by Ruth Pitchford)