While supervision is intended to guarantee the stability, resilience and efficiency of the financial system, regulation is designed to prevent systemic risk, i.e. the possibility of a sudden or unexpected event that affects the financial system as a whole.

The fact that there is a set of rules and regulations means that the financial institutions subject to them must ensure that they are obeyed and thereby guarantee confidence in the financial system.

The Portuguese financial system is based on an institutional supervisory model with a clear distinction between the three market segments - banking, financial and insurance.

The current supervisory model is divided as follows:

The Portuguese supervisory model
Supervisory authority Comissão do Mercado de Valores Mobiliários Banco de Portugal Instituto de Seguros de Portugal
Scope of supervision Securities markets and financial derivatives from the activity of agents operating in them Credit institutions and financial companies Insurance and reinsurance
Market segment Financial Banking Insurance
Horizontal Supervision
Vertical Supervision
Vertical Supervision

The supervisory model of the Portuguese financial system is currently being revised and it is expected to be changed into one with only two supervisory authorities - the Twin Peaks Model.