Speech by the Governor of the Banco de Portugal, Mrio Centeno, at the session to commemorate the 175th anniversary of the Banco de Portugal

President Lagarde

Prime Minister

President of the Supreme Administrative Court

Minister of State for Finance

Ladies and gentlemen

It is with great pleasure that I welcome you to this ceremony marking the 175e anniversary of Banco de Portugal.

As Governor, it is an honor to celebrate this important milestone in the life of the Bank.

The festivities that we are launching now will last several months due to health restrictions.

Our Bank must be an inclusive institution and, as such, the key moment which marks these 175 years will be shared with the entire population next May.

I have spent a large part of my career in this institution, testifying to its importance and influence in national and European economic policy.

The Banco de Portugal is one of the oldest central banks in Europe. But for us, it’s not just any central bank, it’s our Bank.

Its creation dates back to the first half of the 19e century, to 1846, when the key pillars of the Portuguese financial system were established and the Bank participated in them from the start.

The history of the Bank is inextricably linked to the economic and financial history of the country. It is the story of an institution that has grown and adapted over the course of 175 years, always carried by the aim to serve the Portuguese well.

We understand how crucial the quality of institutions is for the prosperity of nations and we want to participate actively in the success of our country.

In the many difficult situations the country has faced, Banco de Portugal has always been a pillar of resilience for Portuguese society, contributing to the economic and financial stability of the nation.

This is explained by an action guided by its public service mission and supported by rigorous principles in the analysis and definition of policies under its responsibility.

In times of crisis, it is our duty to explain, inform and contribute to solutions. When everything seems to be going well, we need to identify the challenges and give the necessary warnings to ensure financial stability.

On the contrary, the history of Banco de Portugal has taught us that economic and financial stability is the result of the complex functioning of our economic, social and even political and cultural systems. While being a collective goal, it is an increased responsibility for Banco de Portugal.

During this long journey, the Bank has taken on a number of missions and functions, as you will be able to see in the video which will be released shortly. However, I want to focus on the historical period of European integration and underline the central role of the actions of Banco de Portugal in this process.

Alongside the other central banks of the euro zone and the ECB, we have been involved from the start in the establishment of monetary union. We have been and continue to be important players in the process of European integration.

As I have said in other forums, this process is the most successful political, economic and social construction in modern history in the world.

When Portugal joined the European Community, its inflation rate was among the highest among EEC countries. At that time, the Banco de Portugal was playing a crucial role in controlling inflation, essential for the nominal convergence of the Portuguese economy.

Inflation, which peaked at almost 30% in 1984, fell to almost 2% in 1997. Portugal has entered a new era of stability: characterized by low and stable inflation.

In June 1998, the Banco de Portugal became one of the foundersof the European System of Central Banks with the mandate to preserve price stability in the euro area as well as the credibility of the single currency, which would be created six months later.

Our currency – the euro – is the most tangible representation for European citizens of the success of European integration.

It is possible to prove that even institutions, such as the euro, need to mature and evolve by looking at two simple results.

The first is the continuous improvement of the institutional framework of the euro, which took on capital importance just before the health crisis, with the creation of the first fiscal instrument for the euro zone. These improvements have led to significant progress towards sharing and reducing risk in the euro area.

The second is the growing importance that citizens of the euro area attach to the euro and to Economic and Monetary Union. Ensuring that citizens identify more with their own institutions is essential for the latter to be able to carry out their tasks.

According to the latest Eurobarometer in May, 80% of Europeans living in the euro area were in favor of the euro, an increase of 4 percentage points from a year ago and 13 percentage points from a year ago. is barely five years old. In Portugal, this percentage is higher, standing at 82%. By the turn of the century, these figures were 20 percentage points lower in both the euro area and Portugal.

The global financial crisis and the sovereign debt crisis have shown the need to go further in European integration to ensure the stability of the financial system and to strengthen the Economic and Monetary Union.

Banco de Portugal has been involved in building the banking union from the start and is now a part of the Single Supervisory Mechanism and the Single Resolution Mechanism.

Supervision is now more proactive, more comprehensive, more harmonized, more conclusive and more forward-looking.

In working to safeguard financial stability, we focus on the safety and soundness of the banking system. Stability is an asset both for consumers of banking products and for entities operating in the market, including, of course, the payment system.

Over the past decade, lawmakers, regulators and supervisors have taken steps to increase the resilience of the system.

The importance of this framework was evident in the response to the pandemic epidemic.

However, as in all fields of human endeavor, much remains to be done. I am referring here to the completeness of the 3rd pillar of the Banking Union, the European Deposit Guarantee System, as well as the implementation of the Banking Package, recently published by the European Commission.

These measures will increase confidence in the system and favor all jurisdictions, allowing European banks to become more resilient. Do not hesitate to take this path.

But back to the euro.

The prosperity of our countries is based on a stable single currency which deserves the confidence of citizens, which our central banks must safeguard and promote on a daily basis.

It is with this conviction that Banco de Portugal, in its Strategic Plan for 2021-25, has given priority to strengthening confidence in the euro.

This can only happen if central banks are aware of the importance of cultivating a close relationship with citizens, by showing the public why the objectives they pursue (price stability and financial stability) are essential to the daily life of society as a whole. As such, “promoting proximity and strengthening trust” is the motto of the new Banco de Portugal Strategic Plan..

The central banks of the Eurosystem are aligned and committed in this direction, as evidenced by the review of the ECB’s monetary policy strategy, the results of which were published last July. We now have a monetary policy strategy rooted in today and in the future.

In this regard, it is worth noting the active participation of Banco de Portugal in the discussions which contributed to this review. In our reflection, we have listened to and taken into account the views of citizens, academics and civil society organizations.

Behind the new strategy hides a key couple for decision-making: solid data; solid analysis.

It is also a tradition within the Bank, which we wish to strengthen in the years to come.

By 2025, Banco de Portugal’s goal is to contribute has a recovered and resilient Portuguese economy, converging on Europe in the medium and long term.

We will do this through timely, quality economic analysis and sound policy advice.

And we will do this by listening to people as well as our national and international partners, using communication channels that promote public understanding of what we do and why.

This is why today, symbolically, we are celebrating the anniversary of Banco de Portugal in the presence of national and European institutions, during a ceremony which is also broadcast live to all those who want to join us and to all our employees. . Allow me to take this opportunity to address a special greeting to them, as they fulfill the mandate entrusted to the Banco de Portugal every day.

In recent months, we have used this same atrium, the Currency Museum, to showcase the Banco de Portugal’s work in economic, statistical, financial and monetary analysis. The Bank is today an institution fully open to the community, sharing both challenges and collective successes.

In front of this audience, which goes far beyond Rua do Comércio to the whole country, I can assure you that you can count on us to build a strategy of development and prosperity for Portugal and Europe, renewing each year the commitment made 175 years ago.

Thank you.


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