“The temptations to reduce independence are not a feature of the countries of the South alone. (...) Where the treasure lies, there are always temptations to remove it,” said the Governor of the Bank of Portugal (BdP) , Carlos Costa, at the opening of a conference in Lisbon on risk management at central banks.
On the topic of the conference, Carlos Costa considered that central banks cannot avoid risk in carrying out their mandate - as regulation creators, regulators and those responsible for monetary and financial stability - and that the “art” of the central bank is to know how to “deal with risk without undermining financial stability and monetary stability.”
To do this, he said, it is necessary to design a risk management framework that is a “pillar of confidence” to prevent the central bank’s balance sheet from reaching a “disruption” point and the point of crisis.
Costa considered that, after a period of crisis, when central banks had to deal with immediate concerns, they now have to think about best practices for their own risk management.