Lisbon, July 24, 2025 (Lusa) - Mário Centeno's term at the helm of the Bank of Portugal (BdP) is coming to an end, after five years marked by the pandemic and the war in Ukraine, with a troubled conclusion, marked by disagreements with the Minister of Finance.
On Thursday, the government announced that it had appointed economist Álvaro Santos Pereira as governor of the BdP, succeeding Mário Centeno, who ended his mandate on Sunday.
Centeno moved directly from the Ministry of Finance to the central bank, which caused controversy at the time due to the transition from one position to the other and prompted discussions about the possibility of determining a period of nojo for these processes.
It was also at a time when the country and the world were grappling with the pandemic, forcing an extraordinary budgetary effort and measures on the part of the European Central Bank (ECB), where Centeno now has a seat.
The former finance minister announced that he was going to be an interventionist governor in an opinion piece, and in fact stood out for issuing several warnings to governments, even starting to write articles in his own name, an innovation at the BdP.
+++ Warnings to commercial banks +++
Centeno also issued some warnings to commercial banks, namely criticising them for low interest rates on deposits when they can get higher interest rates from the central bank.
The BdP also stated that the profits the banks were making should be evaluated in the long term, as 2023 allowed the banks to rebalance past years of losses.
The banking regulator and supervisor also argued that banks should use the positive margin to prevent future issues and decided to require banks to reinforce their capital reserves.
European banking regulators and supervisors have warned banks to use part of their profits (instead of distributing them) to increase their capital cushions and thus be better prepared for future crises.
+++ A “dove” at the ECB +++
At the ECB, Centeno has positioned himself among the governors as one of the “doves”, i.e. in favour of a more accommodating and softer monetary policy, often appealing in interviews and public statements to the need to lower interest rates.
The international press even describes Centeno as one of the most “dovish” members of the ECB. For example, recently, at the beginning of June, he stated in an interview with an Italian newspaper that the eurozone needs stimulus from the ECB, considering that interest rates could potentially drop even lower.
+++ Involvement in politics +++
Despite the central bank's independence, Centeno has sometimes found himself entangled in political issues, most notably when there was speculation about him becoming prime minister to replace António Costa, following the controversy that led to the head of government's resignation in 2023.
"The PS, as a benchmark for stability in the country, had to come up with an alternative solution that would save the country months of paralysis until the elections, by appointing a personality with strong governing experience, respected and admired by the Portuguese, with strong international prestige: Professor Mário Centeno," he specified.
However, according to the prime minister, "the president understood that, rather than a stable solution, with a strong government of renewed quality, under the leadership of Professor Mário Centeno, the option was to hold elections".
This news even earned Centeno an investigation by the ECB's Ethics Committee, which ultimately concluded that the governor's "independence was not compromised" by the invitation to become prime minister.
Towards the end of his mandate, the governor's name was even mentioned as a possible candidate for the Presidency of the Republic. Still, Centeno denied this in January of this year.
+++ Discord with the government +++
Over the past five years, Centeno has dealt with several governments, including two led by António Costa, with João Leão and Fernando Medina serving in the Finance portfolio, and two led by Luís Montenegro, both of which had Joaquim Miranda Sarmento as Finance Minister.
The former shared Centeno's political leanings, but that didn't prevent some tension, such as when Centeno and Costa argued about the European budget and the rule, introduced by the Eurogroup, that would reduce Portugal's allocation.
He also had some disagreements with Miranda Sarmento on topics such as the brain drain, lowering the corporate tax rate, providing a public guarantee for young people to buy houses, and the budget deficit forecasts.
Montenegro's decision to appoint Hélder Rosalino as secretary-general of the government also caused controversy, with Centeno stating that he would not pay the salary of the former BdP administrator in this new position, which he did not accept.
+++ The construction of the Bank of Portugal's new building +++
This week, after the end of Mário Centeno's mandate, the government announced that it would request an audit from the General Inspectorate of Finance (IGF) into the construction of the Bank of Portugal's new building.
At issue is the contract that the central bank, led by Mário Centeno, signed in May with Fidelidade to buy a building on the site of the former Feira Popular, in Entrecampos, Lisbon, for the institution's future premises, for €191.99 million, with the final transaction scheduled for the end of 2027.
Observador reported on Monday, 21 July, that the value of the future facilities will exceed €192 million, as the figure refers only to the structural works, with the online newspaper estimating that the total cost could rise to €235 million.
The newspaper also reported warnings from Bank of Portugal consultants about licensing and the possible need for an environmental impact assessment for the construction of the car park.
The information led the institution to respond to questions from Lusa, saying that it complies with all the rules in the process of buying the building.
MES/ADB // ADB.
Lusa
