Centeno responds to ECB over Financial Supervision plan in Portugal

  • ECO News
  • 24 May 2019

The European Central Bank fears that new Centeno's plan will compromise Bank of Portugal's political independence. Minister has denied such intentions and will move forward with his plans.

The European Central Bank has delivered yesterday’s morning its report on Centeno’s new proposal for supervising the financial sector and the overall evaluation is negative. Mario Centeno drafted this reform in 2017 and aimed for, among other measures, creating a brand-new macroprudential National Council of Supervisors that would empty the Portuguese Central Bank from its resolution mechanisms.

The organisation led by Mario Draghi criticised the Portuguese Ministry of Finance for intending “to create an additional layer of political pressure to the Governor´s responsibilities”, which the report believes that “it would not be compatible with the guarantees that were designed to preserve the independence of the Bank of Portugal”.

The Minister has already responded, stating that “any necessary clarification will be made” to ECB’s remaining doubts. Centeno added that the proposal was built from a common ground found with politicians and supervisors and that will respect any existing treaties.

Mario Centeno also remembered that “we cannot possibly imagine political decisions to be dictated by other institutions rather than the national ones”, stressing that it would be up to Parliament to approve or not.

Despite the report not being binding, the Portuguese Parliament might consider and follow the indications of the ECB. If not, the ECB can always denounce it to the European Commission that will then rule out about it.