Statistical News Release: DNB's balance sheet expansion is levelling off

Statistical news
Datum 7 mei 2018

Since the end of March 2017, the balance sheet of De Nederlandsche Bank (DNB) expanded further to EUR 367 billion at the end of March 2018. This increase is less pronounced than that seen in the two preceding years, however. The flattening balance sheet expansion is partly attributable to the decision by the European Central Bank (ECB) to reduce the monthly volume of the asset purchase programmes.

Securities holdings

In the past three years, securities holdings rose by EUR 92 billion, mainly as part of the Eurosystem's asset purchase programmes, which are aimed at driving up inflation. The bulk of this increase took place in the first two years (+ EUR 76 billion), with holdings of securities under the purchase programme as a percentage of DNB's total assets expanding to 31%, from 22% at end March 2015. Between end March 2017 and end March 2018, securities holdings climbed by EUR 16 billion, of which EUR 3 billion in the first quarter of 2018. This is well below the EUR 10 billion rise seen in the first quarter of 2017, as the volume of joint monthly purchases by the Eurosystem was brought down from EUR 80 billion to EUR 60 billion in April 2017, and further reduced to EUR 30 billion in January 2018. At the end of March 2018, 80% of DNB's securities holdings consisted of debt paper issued by euro-area governments; this represents a three percentage point fall on the year-earlier period, when the proportion of these securities saw its peak of the past three years. This is due to a relative increase in the proportion of corporate bonds and covered bonds in the Eurosystem's monthly purchases.

TARGET2 balance

The TARGET2 balance grew by EUR 41 billion in the past quarter. This balance reflects the claims that DNB has on the Eurosystem and results from cross-border payments, mainly initiated by private institutions, within the EU settled in euro by the central banks. The proportion of these claims expressed as a percentage of DNB's total assets at end March 2018 is 31% and has remained largely unchanged as compared with end March 2017. The EUR 10 billion increase in the TARGET2 balance between end March 2017 and end March 2018 is sharply lower than that seen in the preceding two years, when this balance expanded by EUR 99 billion, which further explains the flattening expansion of DNB's balance sheet.

DNB's balance sheet in perspective

DNB publishes monthly information on its statistics website, which also includes a dashboard reflecting the expansion of DNB's balance sheet in a historical perspective. The ECB publishes comparable data for all central banks in the euro area on its own website, which makes it possible to compare different countries. The movements observed in DNB's balance sheet over the past six years are similar to those seen for other euro area central banks. Since the end of 2014, central bank balance sheets in Germany, Spain, France, and the Netherlands have expanded sharply. In all these countries, big balance sheet expansions were preceded by periods of contracting balance sheets. Incidentally, these figures originate from the accounting balance sheet. Due to risk sharing in the Eurosystem, the economic balance sheet deviates considerably from the accounting balance sheet.