The governor of the Bank of Portugal said on Thursday that the country is going through a moment of reflection, citing statements by David Mourão-Ferreira on the risk of being a freethinker, and advised banks to use “earned” profits to to prepare for the future.
At the opening of the conference ‘A Banca do Futuro’, organized by Jornal de Negócios and Claranet, Mário Centeno said that this meeting takes place in a “At a time when the country is being encouraged to think, it is not only the Governor of the Bank of Portugal who is invited to think”.
The governor quoted lines from David Mourão-Ferreira’s poem ‘Abandono’, which he said he remembered on Wednesday evening as he prepared his speech this morning.
“By your free thought/They went far to enclose you/So far my lamentation/Cannot reach you”said Centeno, who, however, did not link this and the recent political controversy in which he was involved, as his name was proposed by António Costa to succeed him as Prime Minister, but with the financial sector.
“It was thanks to free thinking that we actually achieved the financial stability that banks enjoy today”he added.
Centeno opined that the recent “The transformation process of the Portuguese banking industry has been extraordinary” with asset reduction, bad debt reduction, capital strengthening and profitability improvement.
According to the governor, the current “results are deserved”, but they are also “cyclical and must be used to prepare for the future”.
“What I most wish from the banks is that they implement a sensible policy for determining impairments and capital. At a time when many look at the results and find them extraordinary and excessive, these results have an excessive cyclical dimension and fortunately the banks have responded to the challenge of remuneration of savings, attention to customers, there are tens of thousands of renegotiated credits”he claimed.
Last week, the former Minister of Finance (of António Costa’s PS governments) said during a lunch at the American Club of Lisbon that the economy goes through negative and positive cycles and that the current profits of banks are also the result of the positive cycle. and that they should set aside part of the profits to avoid negative periods in the future.
Centeno also praised the Portuguese economy, especially the improvement in public finances and the labor market, as the strength of employment in the eurozone is the “result of the excellent public policy response” during the pandemic crisis.
Looking ahead, he believed that the coming years will be challenging, also due to the external context.
Regarding the significant increase in interest rates, he said that they “desirably will not return to zero”, but that he expects them to fall to a range between 2% and 2.5%, which is compatible with an inflation rate of 2% in the medium term. term.
“For us to get there, to implement this normalization [da política monetária] and to respond to inflation, it was necessary to increase the European Central Bank’s policy rate.”he said.
At the end of this conference, Centeno did not speak to journalists, after the controversy that surrounded him for being proposed by the current Prime Minister, António Costa, to replace him in this position.
Even after the President of the Republic, Marcelo Rebelo de Sousa, decided that early parliamentary elections would take place on March 10, following the resignation of António Costa (because he was the target of an investigation by the Public Prosecutor’s Office), Centeno’s suggestion led to criticism. of opposition parties and a dispute between Mário Centeno and the President of the Republic.
Speaking to the Financial Times newspaper on Sunday, the governor of the Bank of Portugal stated that this was the case “an invitation from the President and the Prime Minister to reflect and consider the possibility of leading the government” and that he was “a long way from making a decision.”
In response, from Sunday to Monday in the early hours of the Republic, the President of the Republic published a note denying that he had invited anyone to head the government, including the Governor of the Bank of Portugal, Mário Centeno, or any had allowed contact for this purpose. is made.
Marcelo Rebelo de Sousa’s statement prompted Centeno to correct his statement: “It is unequivocal that the President of the Republic did not invite me to head the government.”when he chose to dissolve the Assembly of the Republic, Mário Centeno said in a statement.
Mário Centeno’s behavior led to an extraordinary meeting of the Bank of Portugal’s ethics committee to be evaluated, which ruled that the governor fulfilled his general duties of conduct and “acted with the required reserve”. However, he adds that “on an objective level, the subsequent political and media developments could damage the Bank’s image,” as “the defense of the institution is even more relevant in a period like the current one.”
In that sense, the committee chaired by Rui Vilar recommends this “the governor, the government and the bank as a whole remain committed to protecting the image and reputation of Banco de Portugal”.
Source: DN
