WARSAW--The Polish government is working on plans to convert Swiss franc mortgage loans owned by Polish borrowers into zlotys to reduce private debt and foreign-currency exposure, passing the cost of the operation onto banks, the prime minister said Monday.

The government will on Wednesday present detailed proposals for loans denominated in francs after the Alpine currency's recent appreciation increased the mortgage debts of more than half a million Polish borrowers only months ahead of parliamentary and presidential elections.

Protesters took to the streets in several cities over the weekend to demand relief from franc-linked loans whose zloty-denominated value in some cases has doubled since 2008 as the safe-haven Swiss currency has firmed amid Europe's public debt crisis.

"If I'm given a choice between the interest of banks and the interest of the people who took those loans, I will stand on the side of the people at the expense of banks, not the budget," Prime Minister Ewa Kopacz said on state radio Monday, adding that one of the proposals from the government will likely be a conversion into the zloty.

Officials in Warsaw last week reached out to Budapest, where the Hungarian government last year decided to convert franc loans there into the forint at a fixed exchange rate. The market rate at the time was much lower than at present. To reduce the debt burden in Poland, the government here would have to use a historic exchange rate of the franc to the zloty, a solution proposed by the conservative opposition.

A committee comprising Poland's finance minister and the central bank chief last week instructed banks to pass on negative London interbank offered rates to their customers to sharply reduce the interest borrowers pay on franc loans, reducing the banks" profit margins.

President Bronislaw Komorowski is set to meet the central bank chief, Marek Belka, on Monday to discuss the loans. Mr. Belka said last week that using a historic exchange rate for the franc would violate contracts between banks and borrowers.

The courts may yet rule that foreign-currency loans were illegal speculation on the part of banks, which would change the rules for the finance sector, Mr. Belka also said.

Write to Martin Sobczyk at marcin.sobczyk@wsj.com

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