Today, speaking at the ASEAN+3 Economic Cooperation and Financial Stability Forum (online) in his capacity as FSB chair, Klaas Knot said that vulnerabilities in the global financial system remain elevated.Read more
Public trust in financial institutions remains stable despite turmoil in financial markets
Published: 02 May 2023
Dutch households' trust in financial institutions has remained stable over the past year, despite the recent problems faced by banks in the United States and Switzerland. During that period, households did think slightly more often about the possibility of Dutch banks failing. This has emerged from a DNB survey held among more than 2,200 households.
Public trust in financial institutions remains stable; trust in politics and business is down
DNB measures Dutch households' trust in financial institutions, such as banks, pension funds and insurers, every spring. This year, this survey was held in the second half of March, which happened to coincide with the bankruptcy of US Silicon Valley Bank and the takeover of troubled Credit Suisse by UBS in Switzerland.
The survey results reveal that trust in financial institutions among Dutch households remained stable over the past year. Figure 1 shows that 52% of those surveyed had either fairly high or very high trust in financial institutions. The remaining share have little or no trust in them at all. In contrast, trust in business and national politics has fallen over the past year. In 2023, 22% reported having trust in politics, down from 29% in 2022. Trust in DNB is at the same level as in spring 2022 (73% have fairly high or very high trust), after being at a lower level in autumn 2022. One possible explanation for this dip is inflation, which peaked in autumn 2022 (see Trust in central bank and national politics has fallen due to high inflation).
Figure 1: Trust in financial institutions remains stable
Share of respondents with fairly high or very high trust
Note: Public trust in financial institutions reflects the average of trust in banks, insurers and pension funds. Trust is measured once a year. In an additional survey, held in autumn 2022, trust in DNB, the ECB and national politics was measured. The results of this survey have been incorporated into this figure.
Public trust in the financial health of banks, insurers and pension funds remains unchanged
Furthermore, the survey shows that households have trust in the financial health of Dutch banks, insurers and pension funds. Figure 2 shows that in 2023, 62% of respondents have substantial or full confidence that pension funds will be able to fulfil their commitments to pensioners. Also, 68% of respondents are confident that insurers can meet their payment obligations to policyholders.
Confidence that Dutch banks will be able to repay the money entrusted to them at all times is at a similar level. Confidence that one's own bank is capable of doing so is even slightly higher at 75%. Closer inspection reveals that respondents who completed the questionnaire prior to the announcement of UBS's takeover of Credit Suisse were slightly more confident in their own bank's financial health than those who completed the survey after the announcement (77% against 73%). Over the past year, households have also thought slightly more often about the possibility that Dutch banks could fail. In 2023, 38% of those surveyed said they thought about this occasionally or very often in the past year, up from 34% in spring 2022.
Figure 2: Public trust in the financial health of banks, insurers and pension funds
Share of respondents that have substantial or full confidence
Dutch institutional investors such as pension funds, investment funds and insurers kept their investments in risky bonds roughly the same over the past 12 months. This is a break from previous years: since 2019, large investors had expanded their exposure to what are termed high-yield bonds.Read more
Dutch banks are financially resilient, thanks in part to increased interest rates. This gives them the room to step up their ambitions in terms of digitalisation, sustainability and the fight against money laundering.Read more
In his introductory remarks at the Fifth Macroprudential Policy and Research Conference at the ECB in Frankfurt Klaas Knot discussed some of the challenges in using macro-prudential tools.Read more