ECB Insight: Centeno Waits, Lisbon Delays: The Uncertain Road to a Successor at Banco de Portugal

15 July 2025

By Marta Vilar – MADRID (Econostream) – With just days to go before Mário Centeno’s term as Banco de Portugal governor officially ends, the government has yet to name a successor – a delay that makes it increasingly likely he will remain in place for next week’s ECB Governing Council meeting, and possibly even the one in September.

Still, these appearances are likely to be among his last, as the government shows little appetite for extending his mandate beyond its scheduled end on July 19, 2025.

Centeno, for his part, has made clear he is open to a second term – a courtesy granted to each of his two immediate predecessors. While some familiar with the matter say Centeno’s chances of reappointment have slightly improved in recent months, that outcome remains unlikely overall.

No one questions his qualifications, making it clear that the decision is political. Centeno brings a Harvard PhD in labour economics, domestic political experience gained over five years as Portuguese finance minister and intimate knowledge of Europe acquired during a two-year stint as head of the Eurogroup.

It is hard to imagine that Lisbon takes any exception to his well-known support for accommodative monetary policies; Centeno is arguably the most dovish member of the Governing Council.

Be that as it may, if he is indeed to be replaced, then the government must propose a new candidate, a process that involves several formal steps and is likely to be delayed by the summer recess, making a decision before September increasingly improbable.

According to Portuguese law, the parliamentary Budget and Finance Committee must issue a positive opinion about the nominee proposed by the Minister of Finance. This opinion must be published in the Official Journal of the Republic and approved by two thirds of the members of Parliament.

No official announcement has been made, and Portuguese media report that Parliament will break for summer recess from July 18 to September 9, leaving little time for any proposed candidate to complete the required steps before the pause begins.

It’s not as if the current government hasn’t had time to consider the issue. Prime Minister Luís Montenegro has governed since April 2024 giving his team plenty of time to weigh their options. The decision was even considered by Portuguese media as one of the top priorities of the government when reinstalled six weeks ago after May elections.

Nor is the delay due to a shortage of potential candidates, as several highly qualified names have already emerged in public debate. Still, given the time the decision is taking, it seems the government has yet to find a candidate who clearly ticks all the boxes.

Among the first names floated was Vítor Gaspar, a veteran economist with deep institutional credentials. As a former minister of finance, director general for research at the ECB and adviser to the Banco de Portugal, Gaspar brings substantial experience in both economic policy and central banking.

Furthermore, his international perspective given his current role as director of the Fiscal Affairs Department at the International Monetary Fund makes him a particularly strong candidate.

However, while 64 is not particularly old by central banking standards, Gaspar is nonetheless expected to retire following his departure from the IMF, currently anticipated for November 2025.

A younger contender is Professor Ricardo Reis (46), a highly regarded monetary economist whose strong research credentials make him a standout choice, particularly within academic circles.

Currently a professor at London School of Economics, Reis enjoys broad recognition in global monetary policy forums but remains largely unknown to the Portuguese public and media, which could pose a challenge for someone stepping into such a high-profile national role.

Plus, despite his academic stature, Reis lacks direct experience in central banking operations or financial supervision, which could be regarded as a must for a role that involves management, regulatory oversight and crisis coordination.

Another name in the mix is Álvaro Santos Pereira, a former economy minister, who however did not complete his term and was instead reshuffled. As the other two candidates, he enjoys strong international recognition, especially given his current role as OECD chief economist.

Appointed to this role only in June of last year, a departure now could raise questions about continuity and commitment, which could make a move to the Banco de Portugal unlikely.

Like Ricardo Reis, Pereira’s background is not anchored in central banking or financial supervision. He is generally seen as a broad-based policy economist rather than a specialist in the areas typically expected of a central bank governor.

Despite the government’s hesitation to grant Mário Centeno a second term, the top job at Banco de Portugal remains unassigned, even as several well-credentialed candidates are in the running.

While the delay virtually guarantees Centeno’s participation in at least one or two more ECB Governing Council meetings, securing a second mandate remains an uphill battle, though it’s a scenario he hasn’t ruled out. The longer the government postpones its decision, the more possible a reappointment could become.