The launch of the book entitled " The Banking Crisis in Portugal" by Professor Tiago Cardão-Pito, PhD, and co-author Diogo Baptista, MSc, will take place on the 5 th of June.
This work will be presented by Professor João Duque, at 16.00, on the Terrace (New Building – Quelhas).
Free entrance, subject to pre-enrolment onwww.tinyurl.com/crisebancaria.
About the book
The decision to write this book followed the publishing of a paper in the "Journal of Economic Policy Reform" and is based on the following thesis: that the most serious financial crisis faced by Portugal in recent years may be related to a banking crisis that resulted from the adoption of the Single Currency.
The Euro eliminated exchange risk, but not credit or liquidity risks. Notwithstanding, during the early years of the Euro, Portuguese banks behaved as if all of these risks had been eliminated. They started pumping massive amounts of money into Portugal. These funds were obtained through low-interest loans contracted with foreign banks operating in the Euro Area. The resulting large amount of liquidity led to dangerous banking cycles that tend to lead to banking crises, and is often the root cause, resulting especially in cycles of a bonanza of capital flow and cycles of accentuated growth in credit, followed by a credit crunch and consequent collapse.
These cycles had grave consequences for the banks and the Portuguese economy as a whole. Private and public debt increased dramatically, the problem being substantially aggravated when the Portuguese State felt obliged to intervene in the banks. The country was then compelled to adopt extreme measures to confront extraordinary levels of debt.