Lisbon: Bank of Portugal and the Money Museum

This series of posts describes a study abroad course in which students visited several central banks and talked with central bankers about how they responded to—and sometimes failed to respond to—the global financial crisis, and how they are adjusting to their new roles.

by Iliana Gonzalez

Lisbon, Portugal is a city full of marvelous attractions and welcoming citizens. In addition to being a great place to tour and enjoy the vast beaches, it also home to the Bank of Portugal, one of the central banks of the Eurozone. Upon our stay in Lisbon, we were able to visit the Bank of Portugal and learn about the changes Portugal instituted to overcome the financial crisis that began in 2007.

Initially, Portugal was not affected by the crisis that hit the United States, however, as time progressed, and Greece’s deficit continued to escalate, Portugal became affected. In the spring of 2010, Portuguese banks entirely lost access to funding in international markets. Portugal’s economy went through a lack of growth during the crisis that led to an inability to reduce their deficit. As a result, Portugal’s deficit increased immensely, and it was forced to ask for help from the European Central Bank. With the money that Portugal received as a loan, it was able to recover from the crisis and turn their deficit into a surplus.

Among the changes in the Portuguese banking system were reforms that were implemented to increase potential growth, create jobs, and improve competitiveness. Furthermore, fiscal policies were implemented to increase revenues and reduce costs. The financial system was also greatly modified to ensure the bank had enough funds, to fund its operations and in case of emergencies, and there was increased monitoring and regulation to ensure everything was in place and running accordingly.

Overall, the visit to the Bank of Portugal was an enjoyable visit full of learning, and new experiences. Throughout the presentations, we were able to enjoy some exquisite Portuguese pastries that were extremely delicious. After the presentation concluded, we were able to visit the Money Museum that is also part of the Bank of Portugal. The museum has interesting history, as it was previously a church that was restored to become the money museum. The money museum features an exhibition that demonstrates the evolution of money that has left a historic mark in Portugal.

After the presentations and the visit to the Money Museum, we were treated to lunch at a very modern restaurant in the city, and given the chance to interact with the professionals of the Bank of Portugal in a more personal and relaxed setting. The lunch consisted of delicious, traditional Portuguese food. I was able to sit by Diana Bonfim and was able to learn about her experience with the Bank of Portugal and some aspects of her personal life.

Visiting Lisbon, Portugal, turned out to be a wonderful experience. One of things I found the most striking was how kind and generous the professionals from the Bank of Portugal were with us, and how much time they put into organizing a great visit for us. Undoubtedly, Lisbon was one of my favorite places to visit throughout our tour of the Central Banks, and I am definitely planning to return to such an amazing city!

Lisbon: Bank of Portugal and the Money Museum

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Study Abroad Course: Central Banking since the Financial Crisis

This series of posts describes a study abroad course in which students visited several central banks and talked with central bankers about how they responded to—and sometimes failed to respond to—the global financial crisis, and how they are adjusting to their new roles.

by Charles Kahn, Bailey Memorial Chair Professor, Department of Finance, University of Illinois

The financial crisis changed everything. Before the dramatic events of 2007-8, most people believed that developed economies had solved the problems of guaranteeing financial and macroeconomic stability.

But then freezes of financial markets throughout the world and the failures of major banks and other financial institutions, led to a deep recession from which the world is only beginning to recover.

Nowhere was the fallout greater than in Europe. Just as the continent’s economies began to adjust to the new realities, Europe’s sovereign-debt crisis threatened the foundations of the most ambitious of all European projects: the common currency.

Central banks have the job of protecting currencies, financial systems and the macroeconomy. These jobs were regarded as routine before the financial crisis. Now many would say that they are impossible.

How have these organizations adjusted to their new challenges? That’s what we are finding out for ourselves. Our group is on a trip to meet with officials at four different central banks in Europe: the European Central Bank, the Bank of England, the German Bundesbank and the Bank of Portugal. We are learning first-hand how these institutions have changed as a result of the twin crises. We are comparing the situation in Europe with that in the United States, to learn how the institutions differ, and how these differences are related to the difference in underlying economic and political conditions.

We’ll report in these entries on what we’re learning, and also on our other activities during the trip, starting in Chicago, and then going on to Frankfurt, Lisbon and London.

Study Abroad Course: Central Banking since the Financial Crisis

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