Relations between the government and Bank of Portugal are described as “at their limit” after the head of the latter appears to have called an “en garde” moment over banking autonomy.
Carlos Costa was talking at a conference in Lisbon when he made his contentious remarks, alluding to southern countries’ “temptations to reduce the independence of central banks”.
Finance minister Mario Centeno is understood to have taken the remark personally, particularly as he is “sponsoring an alteration to the model of financial supervision in Portugal”, explain reports.
An official source for the treasury told negocios online: “It is lamentable. This has never been the position or indeed the way in which the Finance Ministry conducted itself with the Bank of Portugal. We are hoping that the governor will withdraw himself from declarations made in the name of a healthy institutional relationship”.
Bizarrely, Costa appears to have exacerbated tensions with new remarks as he closed the conference.
Says Lusa, “the governor of the Bank of Portugal said today that central banks do not have the objective to make a profit, but to comply with the public service of contributing to financial and economic stability, avoiding crises”.
With the echoes of so many financial crises still reverberating through the national economy that people have lost count, it remains to be seen how the finance ministry reacts.
Lusa concludes that at the end of the two-day conference, “Carlos Costa did not make any statements” to clamouring journalists.