PORTUGAL Could the ending of this zero interest rate environment be a problem for more indebted countries, like Portugal? Obviously, countries with higher debt levels have benefited more from lower refinancing costs, but this is not the objective of our monetary policy, which to ensure price stability. More fundamentally, we should always keep in mind that investor confidence in the sustainability of public finances is the key determinant of interest rates on sovereign debt. If there are doubts about the sustainability of public finances, spreads can increase to very high levels, despite the ECB’s asset purchase programme. I have noted that, following heightened market volatility due to developments in Italy, spillovers to interest rates on Portuguese public debt were contained, thanks to significant progress in public finances. This again stresses the importance of sound public finances. What is your assessment of Portugal’s progress? Commission and ECB staff concluded their eighth post-programme surveillance mission last week. They stress that the current favourable macroeconomic and financial conditions provide an opportunity to accelerate structural reforms, further reduce macroeconomic imbalances and increase Portugal’s resilience to shocks. Fiscal consolidation remains necessary to ensure a steady decline in the debt ratio. 3/4  BIS central bankers' speeches  They also note that, while Portuguese banks have made considerable progress in strengthening their balance sheets, remaining vulnerabilities in the banking sector need to be addressed, in particular the high level of non-performing loans (13.7% in 2017 compared with an EU average of about 5%).
Thus, over time, a central bank like the SNB can usually rebuild its equity level all on its own after a loss. Nevertheless, even for a central bank, a long period of negative equity is not without its problems, as it can undermine the bank’s credibility and its independence in the longer term. For these reasons, it is important for the SNB to maintain a sufficient level of equity. To ensure that the SNB can carry out its monetary policy mandate without restriction, also in the long term, in the interests of the country as a whole it is essential that its capital base be adequately rebuilt. This means that the necessary profits must be earned, and retained. In the long run, the entire economy will benefit. BIS central bankers’ speeches  1