“Banks now have enough capital to be able to weather the shock,” says Vitor Pinto, president of the Portuguese Banking Association (APB). at Interview with Negócios e Antena 1, This “was the result of the wise work that has been done over the years since the last financial crisis,” the APB official adds. Vitor Pinto advocates, “Banks today have a much greater degree of resilience to the adversities that may arise from the shock of a recession.”
The APB chief acknowledges that “when there’s a recession, there’s a higher risk of default,” but that’s also what the prudential rules work for. That is why banks are subject to stress tests and have sufficient capital to be able to withstand such a shock.”
In the same interview, Vitor Pinto said it is only a matter of time before the ECB begins its rate-raising cycle. “If prices start to rise in other markets, such as the US – and possibly the UK – Europe will have to follow suit,” he says.
Regarding the impact it could have on the economy, the APB chief emphasized that “inflation, if left unchecked, will always hamper growth sooner or later, perhaps more violently” than higher interest rates.
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