Banking Union could be ruinous for Portugal

Creating a European Union-wide banking union will be long, painful and result in Portugal no longer having a financial system according to a constitutional lawyers and financial expert.

Pedro Rebelo de Sousa (the brother of Portuguese President Marcelo Rebelo de Sousa) says in an interview with Portuguese daily newspaper Público that the financial system is in a better state after the world economic and financial crisis in 2008 but warns of “unpredictable elements” that could provoke a new world crisis.

The banker and economist warns that despite the crisis of 2008-2012, the market is still open to the threat of uncontrolled speculation. Instead it is essential to create a responsible structure of governance rather than manage companies based on the immediate creation of value for shareholders over the rest.

The banking system had recovered functionally and ha been taking steps to ward off an eventual crisis or at least prevent one from happening. However, there are things that can unfold which depend on macroeconomic and political scenarios with many unpredictable fronts: Donald Trump, the future of the European Union post-Brexit, the rise of populism which could put the European Union model at risk.

On the banking union he said, “The process will be a long one, hard and it will not be easy for small countries like Portugal which will no longer have a financial system. Our banking system will be penalised. Our banks will have to meet a number of requirements that will place them in a fragile position within the context of the Franco-German Axis which will concentrate the most important banks.”