Portugal's finance minister has warned that the volatility roiling financial markets is "a problem that policymakers need to take very seriously" as he sought to reassure investors his country was committed to budgetary discipline.
Stock markets across the globe have been on a rollercoaster ride since the start of the year, and European banks have come under particular pressure in recent weeks.
Portugal's politics have also played their part in unsettling investors.
The country's controversial 2016 budget, which it submitted more than three months late to the European Commission, will reverse public wage cuts implemented by the previous center-right government. Socialist Prime Minister Antonio Costa must balance appeasing his coalition partners with a commitment to fiscal consolidation under EU rules.
Mario Centeno said measures such as the shortening of the working week for civil servants will be implemented under "very strict conditions" to minimize the cost to public finances.
He added the country was committed to complying with EU budget rules, adding the European Commission had said the budget discussions had been fruitful; the Commission eventually approved the budget last week.
It was now very important to transmit the message that Portugal's budget was deemed satisfactory to the markets, he said.
The country's bonds are rated below investment grade by all the major ratings agencies and Portugal is keen to change that perception.
"Of course we want to improve the way the market sees us, as an economy as a country and of course the public and private debt of Portugal," Centeno said. "This requires very strict commitment and very strict action on the budgetary front and we will do it. "
Investors were also unsettled by the bail-in - when regulators impose losses on bondholders - of Portuguese bank Novo Banco.
Last year, the central bank failed to sell Novo Banco, which was carved out of failed lender Banco Espirito Santo after a 4.9 billion euro state rescue in 2014, as bids came in too low with investors concerned about its liquidity and potential contingencies, Reuters reported.
The agency said that on December 29, the central bank took a controversial decision to transfer nearly 2 billion euros in bonds from Novo Banco back to Banco Espirito Santo, making some investments nearly worthless, a decision private bondholders plan to challenge in courts.
Centeno stressed it was now important to go to the market and to explain that this was a one-off event.
"We are working together with the ECB and the Portuguese financial sector to strengthen, to guarantee that this type of event will not occur," he told CNBC.
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Reuters contributed to this report