Banco de Portugal has already sent Parliament an opinion on the law amending the governor's appointment rules

The opinion that Jornal Económico had access to was delivered to Parliament on Friday and distributed on Monday to COF deputies. Banco de Portugal says that the issue of the diploma falls within the competence of the “sovereign bodies”, but warns of the risk of placing “excessive restrictions” limiting the recruitment capacity in excess, also referring to the need to listen to the ECB.

Last Friday, Banco de Portugal sent its opinion on the PAN bill amending the rules for appointing the governor of Banco de Portugal, as planned.

The opinion that Jornal Económico had access to was distributed on Monday to members of the Budget and Finance Commission (COF). In it, Banco de Portugal refers to European Union law that “contains some rules that are related, albeit indirectly, to the theme of the appointment of Governors or members of the decision-making body of the national central bank, always taking into account in view of the structuring principles of the organization of the European System of Central Banks, which, of course, must always be respected ”.

In general terms, the opinion of Banco de Portugal responds to the Budget and Finance Commission saying that "the object of the diploma is a matter for national competence, therefore it is up to the national sovereign bodies to decide". Banco de Portugal also says that "it is convenient not to place excessive restrictions in order not to limit the recruitment capacity in excess".

In the document, Banco de Portugal invokes the need for consultation with the ECB, which is already taking place, with the European Central Bank requesting another four weeks, which was accepted, although initially it was requested the urgency character that reduces the response time from 30 to eight days.

In the document to which the JE had access, the institution still led by Carlos Costa says that “in the European Treaties and the Statutes of the European System of Central Banks / European Central Bank, a reference to the necessary qualifications of the President, Vice-President can be found and the members of the Executive Board of the European Central Bank (ECB), who are
appointed by the European Council "from among personalities of recognized competence and professional experience in the monetary or banking fields". Safeguarding that this rule does not apply to the designation of Governors or the members of the decision-making body of national central banks, Banco de Portugal states that it is “sometimes used as a parameter by national legislation for their appointment”.

"The Statute of the European System of Central Banks / ECB further establish that the statute of national central banks must provide, in particular, that the mandate of a Governor of a national central bank is not less than five years", recalls the institution.

“It should also be noted that within the framework of the European System of Central Banks and the Single Supervisory Mechanism, a declaration of interests is only foreseen in this regard, in article 10 of the Code of Conduct for Senior Officials of the European Central Bank ( which applies, inter alia, to members of the Governing Council and the Governing Council of the ECB),
through which the holder of the position in question provides information about his previous professional activity, private activities, official mandates and financial interests ”, the document reads.

For its part, adds Banco de Portugal, “the ECB's doctrine, developed through its opinions and systematized in the Convergence Reports, has not looked into possible periods of incompatibility (cooling-off) as part of the appointment of the Governor or the members of the decision-making bodies of the National Central Banks ”. Notwithstanding, “taking into account the object of Bill No. 365 / XIV / 1st, Banco de Portugal must point out, on this occasion, the need to consult the ECB, as a result of paragraph 4 of article 127. And Article 5 (282) of the Treaty on the Functioning of the European Union, also taking into account the provisions of Article 2 (1), third indent, of the Council Decision of 29 June 1998 (98/415 / EC) ”, says the BdP, which thus refers to the ECB whose opinion was requested.

However, in the last amendment to the appointment of the Governor of the Bop, which dated 2015 and which imposed the rule of prior hearing on the competent parliamentary committee, followed by a non-binding opinion, there was no prior hearing on the ECB.

In conclusion, the central bank states that “the Bill no. 365 / XIV / 1 st is clearly located in the sphere of sovereign disposition on the part of the national legislator with regard to the configuration of the Portuguese model of appointment of the Governor of Banco de Portugal and other members of the respective Board of Directors ”.

“In the context of such a national margin of normative provision regarding the aforementioned model of designation of the Governor and other members of the Board of Directors of Banco de Portugal, it is, nevertheless, pertinent to alert to the need for increased consideration in the context of legislative procedure , so that the legal restrictions that may be enshrined in this regard do not prove to be excessive, as in such a case, the universe of designation for holders of such complex functions could be significantly reduced ”, concludes the Bank of Portugal, which therefore calls for no rules to be implemented that may reduce the universe of designation for the administration of the institution in the future.

Unlike the European Central Bank (ECB), which asked for another four weeks to issue an opinion, the national central bank met the deadline initially set by the Finance Budget Committee (COF) when it forwarded the request to the two banking supervisors on an urgent basis.

This request from the ECB was addressed to the President of the Assembly of the Republic, Eduardo Ferro Rodrigues, who communicated it to the Budget and Finance Commission, where the PAN bill is being debated in the specialty.

Despite having asked for the opinions as a matter of urgency, Parliament finally decided to suspend for four weeks the consideration in the specialty of the PAN project that alters the criteria for the appointment of the governor of the Bank of Portugal until the required opinion reaches the European Central Bank (ECB) ).

The chairman of the Budget and Finance Committee, the socialist Filipe Neto Brandão, replied, quoted by Lusa, that an eventual path that would go through “keeping the original term, despite the timely request for an extension by the ECB, would thus be not just institutional rudeness, but also an undue refusal of the request made, with the legal consequences ”. Thus, still according to Lusa, he wrote “I therefore grant the request of the ECB and, accordingly, I determine that, until the requested deadline (for an additional four weeks), all the procedural steps that, in relation to the the bill in question, would follow the expiry of the period originally granted to that entity to issue an opinion ”.

The final global vote on the PAN project - already generally approved with the PS against, PCP and PEV abstentions, and with the support of the PSD, Left Bloc, CDS and Liberal Initiative - was scheduled for July 3. But now it must be postponed, putting the legislative process on hold after the appointment of Mário Centeno as governor of Banco de Portugal.

The deputies have said that the ECB's opinion is not binding, and that “the law is clear and says that the Member State can proceed with the legislative process of regulating the rules of appointment of Banco de Portugal without that opinion having been received ”, The head of the PAN, André Silva, even mentioned.

At issue is the imposition of a period of disgust between the departure of the Ministry of Finance and the assumption of the position of Governor of Banco de Portugal. The PAN bill foresees the regulation of such an interval period, on the one hand, and the implementation of an opinion, by the parliament, that is binding or that at least has a vote by the parties.

On Wednesday the appointment of the nominee will be scheduled at the Budget and Finance Committee, already requested last week by António Costa.

The Prime Minister wrote to the President of the Assembly of the Republic to communicate the Government's proposal to nominate former Finance Minister Mário Centeno to become Governor of Banco de Portugal. “It is the Government's intention, following a proposal by the Minister of State and Finance [João Leão], to appoint Professor Mário Centeno as Governor of Banco de Portugal”, reads the letter sent by António Costa to Ferro Rodrigues.

In the same letter, the Prime Minister then asks that “the hearing of the nominee is required in the competent parliamentary committee, under the terms of the organic law of Banco de Portugal”.

At the end of last week's Council of Ministers, António Costa stated that he had already conveyed to the parties with parliamentary representation the Government's intention in relation to Carlos Costa's succession as governor of Banco de Portugal.

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