On June 5, the launch of the book "
The Banking Crisis in Portugal", authored by Professor Tiago Cardão-Pito and co-authored by Master Diogo Baptista.
The work will be presented by Professor João Duque, at 16h00, on the Terrace (New Quelhas Building).
Free entry, subject to pre-registration at
www.tinyurl.com/crisebancaria.
About the book
This book followed the writing of an article that was published in the Journal of Economic Policy Reform and has the following thesis: the serious financial crisis that Portugal has faced in recent years may be related to a banking crisis that resulted from joining the single currency.
The euro eliminated exchange rate risk, but not credit or liquidity risks. Yet Portuguese banks acted in the early years of the euro as if all these risks had been eliminated. They started pumping massive amounts of money into Portugal. These funds were obtained by borrowing at low interest rates from foreign financial entities operating in the euro area. The huge liquidity generated led to dangerous banking cycles that tend to anticipate banking crises and often cause them, including boom cycles of capital flows and cycles of sharp credit growth followed by credit contraction and collapse.
These cycles had major consequences for banks and the Portuguese economy. Private and public debt grew dramatically, and the problem was greatly exacerbated when the Portuguese state felt compelled to intervene in the banks. The country was then forced to take extreme measures to cope with extraordinary levels of debt.
Poster (pdf)