Overview
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- DNBulletin: Why have short-term market rates turned this negative?
- Over the past two years, yields on Dutch government bonds have progressively declined to as low as -1%, driven by the accommodative monetary policy in the euro area. This means that short-term market rates have even dropped below the ECB’s deposit facility rate, which turned negative in June 2014. The decline in short-term market rates is one of the side effects of the ECB’s Asset Purchase Programme. Despite these dropping rates, the ECB retains its ability to steer short-term market rates through its deposit facility rate.
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- Share of cash payments at points of sale drops to 45%
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In 2016, consumers paid 45% of their purchases at shops, petrol stations, restaurants and other retail outlets in cash. This means the use of cash continued to decrease, like in the two preceding years. Since 2015, the number of consumers' debit card payments has outstripped the number of cash pay-ments. Of the total number of payments, 54.5% are now made by debit card. The share of credit card payments has remained stable over the years, at 0.5%. These data were revealed in a joint study un-dertaken by the Dutch Payments Association and De Nederlandsche Bank (DNB) into the use of cash and debit cards in the Netherlands in 2016.
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- DNBulletin: IMF positive about Dutch financial sector
- The Dutch financial system is resilient to shocks, and supervision on financial institutions has been strengthened following the crisis. These are the main conclusions from the Financial Sector Assessment Program (FSAP) that the International Monetary Fund (IMF) carries out every five years.
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- Unused economies of scale and efficiency at small pension funds
- Small Dutch pension funds still have considerable room to achieve economies of scale. This emerges from a DNB study which reveals that the administrative costs per member of the smallest pension funds exceed those of the largest pension funds by more than ten times. Moreover, after adjustment for the number of members, the administrative costs of mandatory industry-wide pension funds are on average 38% lower and those of occupational pension funds 53% higher compared to those of company pension funds.
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- DNBulletin: Growth in e-commerce dampens inflation
- The growth currently seen in e-commerce weighs down on consumer prices through cost reductions and increased competition. The price discounts which households perceive from shopping online rather than in traditional "bricks and mortar" shops amounts to 6.5%. E-commerce dampened the rise in consumer prices in the Netherlands by approximately 0.1 percentage points.
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- Enhanced bank resolvability through resolution and deposit guarantee scheme
- De Nederlandsche Bank (DNB) is taking important steps in developing a new approach for failing banks. The objective is resolvability: banks must be allowed to fail without threatening financial stability. To that effect, resolution strategies have been determined for the largest Dutch banks should they get into trouble. Good progress is being made in developing the toolkit for DNB to execute an actual resolution. The enhancement of the deposit guarantee scheme (DGS) also underpins public confidence in the banking sector. The DGS payout term is being reduced and the creation of a fund increases the financing capacity of the DGS.
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- DNBulletin: Cash payments should remain possible in the Netherlands
- Although Dutch consumers increasingly favour card payments, a clear majority (71%) believe it must remain possible to make payments outside the home in cash. This has emerged from a study which DNB commissioned on behalf of the National Forum on the Payment System (NFPS), a platform for various interest groups to discuss the efficiency of the payment system. The NFPS recommends always giving consumers the choice between making payments in cash or by card.
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- Bottlenecks in funding of green investments
- Current investments in renewable energy and energy conservation at national and global level fall short of the carbon emission reduction target in the Paris climate change agreement. The main obstacle is insufficient carbon pricing, while other bottlenecks hampering funding include long ROI times, a lack of venture capital, inadequate sustainability benchmarks and the small scale of investment projects. However, a recent survey shows that the availability of finance hardly keeps homeowners from investing in renewable energy sources or insulating their homes.
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- Causes and effects of the lasting weaker global trade growth
- Global trade growth seen since 2012 is weaker than in pre-crisis decades. The waning growth rates are caused mainly by structural factors.
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- Stability and Growth Pact compliance mainly good when economy is in bad shape
- Euro area countries regularly receive consolidation recommendations within the framework of the Stability and Growth Pact. Recommendations aimed at correcting excessive deficits are normally quite well implemented. However, when the economy improves there is virtually no adherence to "preventive" guidance aimed at achieving a balanced budget. As a result, countries face excessive deficit procedures needlessly often, and have to impose austerity measures during economic downturns.
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- Perspectives for growth – the Dutch economy on the move
- Globalisation, technological developments and population ageing influence the nature of the Dutch economy and make it more services-oriented. To foster economic growth, it is essential to invest in education and training, to create a more dynamic economy and to strengthen the resilience of the labour market.
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- Heterogeneity in international investment positions
- Investor behaviour in international financial markets is one of the centres of attention in macroeconomic analyses. A recent DNB study shows that investment behaviour is determined not only by cross-country barriers but also by individual equity and bond characteristics. For instance, differences in maturity and coupon type influence bond investments between investor types.
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- DNBulletin: Focus on banking mortgage portfolios
- Despite the recent crisis in the housing market, the large Dutch banks experienced relatively limited losses on their mortgage loan portfolios. This has emerged from DNB research at the four largest banks in the Netherlands. The banks managed to limit their losses thanks to a number of specific Dutch mortgage market characteristics. However, there are risks for individual homeowners and the economy as a whole. Also, previously identified macroeconomic risks such as the reinforcing effect of mortgage debts on the economic cycle remain in force.
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- Scope to increase labour compensation mainly in domestically oriented sectors
- Generally speaking, the scope to increase labour compensation for employed persons and the self-employed is mainly in domestically oriented sectors such as wholesale & retail trade, transportation & storage, hospitality & catering, rental & other business support sectors. Increases in labour costs in these sectors will have a less adverse impact on macroeconomic price competitiveness than increases in labour costs in exposed sectors.
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- DNBulletin: Cash or electronic payments? The influence of socio-psychological factors
- Consumers' payment behaviour is strongly driven by socio-psychological factors. An individual's emotions, attitude and perception of appropriate behaviour determine how they intend to make payments. In addition to intentions, habits also play a significant role in the way consumers actually pay at the till.
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