Luís Máximo dos Santos: The strategic importance of ethics in public
institutions - possible improvements to the framework and the
practices
Opening remarks by Mr Luís Máximo dos Santos, Vice-Governor of the Banco de
Portugal, at the conference "The strategic importance of ethics in public institutions:
possible improvements to the framework and the practices", Lisbon, 18 October 2023.
* * *
Good afternoon.
It is my pleasure to welcome all participants.
Let me also thank all those at the Banco de Portugal who have contributed to this
initiative, most notably the Compliance Office team, who planned and prepared it.
I should like to extend a very special greeting to our guests from the Bank of England,
the European Court of Auditors and the Central Bank of Ireland, namely Michael Salib,
Mihails Kozlovs and Hannah Byrne respectively, while stressing that Ms Byrne is
currently working at the Banco de Portugal under the Schumann Programme. We are
honoured to welcome them and very pleased that they have accepted our invitation.
The theme of trust and ethics in the financial sector has always been a major issue,
although many, more cynically, see it with some suspicion.
The 2007-09 global financial crisis brought the issue even more to the fore.
Indeed, major shortcomings in terms of conduct and governance in many banks have
deeply undermined confidence in the banking sector.
1
In 2017, Mark Carney, then Governor of the Bank of England, citing a 2013 study ,
drew attention to the fact that, at that time, only 20% of British citizens considered
banks to be well administered, while at the end of the 1980s that figure had been as
high as 90%.
Central banks were not left unscathed from this wave of mistrust and criticism. Thus,
also at this level, measures had to be taken to strengthen trust and ensure that high
standards of conduct were followed by central bank management and staff members
across the board.
From 2015 onwards, the Banco de Portugal has made great progress in that direction.
At institutional level, the Compliance Office and the Ethics Committee were set up.
At regulatory level, the Banco de Portugal is currently served by a robust network of
instruments, of which I would like to highlight:
(i) the Code of Conduct for the members of the Board of Directors;
(ii) the Code and Regulation of Conduct for Employees;
(iii) the Code of Conduct for the members of the Board of Auditors, and
the General Framework of Principles for Contractors of the Banco de Portugal.
(iv)
I could also mention the Regulation on the Internal Reporting Channel (whistleblowing)
or the Plan for the Management of Corruption Risks and Related Offences.
I should also underline that several of these instruments include mechanisms to monitor
compliance with existing rules.
Yet, we know that it is not enough to have an operational and efficient institutional
framework or an adequate set of regulatory instruments to be successful. Rules of
conduct must be understood and internalised and seen as something normal, so that
they can be truly enforced.
The dissemination of a culture that awakens and values the achievement of high ethical
standards is vital - something that requires a lot of training and education. It is my belief
that neither has been missing from our Institution.
The Banco de Portugal has followed a steady path in this respect, albeit at times with
the indispensable growing pains. Determination must always be combined with
common sense, and I believe this has been accomplished.
Overall, this path has been understood by everyone.
Indeed, we know full well how much a slip from one of us could affect the Institution and
consequently, all those who work here. We must be careful, as there are plenty who
would like nothing better than to undermine the Banco de Portugal's mission.
The conduct of members of the Bank's corporate bodies and its employees is therefore
of strategic importance.
And that is how it has been treated.
In fact, the Banco de Portugal's Strategic Plan for 2021-25 defines the Institution's
values as follows: (i) integrity; (ii) competence, effectiveness and efficiency; (iii)
independence; (iv) transparency and accountability; (v) team spirit and (vi) social and
environmental responsibility.
For this purpose, integrity means that the members of the Bank's corporate bodies and
its employees place the public interest at the heart of their activities and are governed
by high ethical standards.
On the other hand, the Strategic Plan is based on two key ideas: promoting proximity
and strengthening trust. In fact, promoting proximity to society at large is, in itself, a
factor for strengthening trust. Knowledge favours understanding.
In short, I can state here, with complete conviction, that the Banco de Portugal is
equipped overall with the necessary tools to achieve and guarantee high levels of
ethical conduct, in line with the highest standards in force in the European Union and its
institutions, in particular the ECB.
But this goal must be continuously embraced, revisited and renewed. Learning from
experience is a never-ending path; one which I promise we will keep on following.
It will not come as a surprise to any of you if I say that we are experiencing difficult
times, wherever we look. Mutual trust is an ever-rarer value and this has very negative
consequences.
This is another reason to discuss the strategic importance of ethical behaviour in public
institutions in general and central banks in particular. Acting well, acting properly, is
within everyone's reach if we want to live in a more trustworthy world. And although this
has always been our fundamental duty, it becomes even more imperative when we
have public responsibilities.
At today's session, we are pleased to welcome experts who are highly knowledgeable
of these issues and have experience in different fields, which is also a factor for
enrichment.
I am sure that we will have a fruitful and stimulating exchange of ideas.
Thank you very much for your attention.
1
Carney, M., Remarks at the Banking Standards Board panel "Worth of trust? Law,
ethics and culture in banking", Bank of England Conference Centre, 21 March 2017, p.
2.