De Nederlandsche Bank (DNB) wants to safeguard a stable financial system. This requires sound financial institutions that operate with integrity. This is necessary to ensure a sustainable economy in the Netherlands. We warn against risks that could affect the system as a whole, and issue advice. We also improve the financial system's resilience by demanding that financial institutions reinforce their buffers.
The financial system is at the heart of the economy. It allows you to save, borrow and invest. It also ensures that you can pay safely and quickly, and that you can cover financial risks that you do not want to or are unable to bear. These things are often taken for granted, but they are essential to the functioning of the economy. That is why it is important that the financial system is robust and that it continues to function under less favourable economic circumstances.
De Nederlandsche Bank monitors the stability of the financial system. Every six months, we publish our Financial Stability Report (FSR), in which we identify the risks to the financial system. We published the most recent version on 10 October 2022. The FSR includes a risk map showing the principal risks to financial stability in the Netherlands.
In our latest Financial Stability Report, we note that risks to financial stability have increased over the past six months. This is due to high inflation, rising interest rates, the war in Ukraine and the worsening economic outlook. If interest rates rise further and incomes lag behind price increases, people, businesses and governments with high debts could run into difficulties. After all, there is a risk they will be unable to repay their loans. We therefore call on banks to be prepared for higher losses. Fortunately, Dutch financial institutions have buffers to absorb potential losses.
Financial Stability Report Autumn 2022 ( In Dutch)
A stable financial system continues to function during economic slowdowns, if banks or pension funds run into trouble, or if stock markets crash. In other words, it is a robust and resilient system that can absorb shocks and contribute to sustainable economic growth in the Netherlands. We cannot allow the financial system itself to become a source of disruption in the economy. A stable financial system also guarantees sufficient financial buffers.
Financial Stability brochure
We look at various areas to assess the stability of the financial system. To do this, we use a large number of indicators, such as an increasing amount of loans (credit growth), rapidly rising real estate prices and the amount of cash that banks are holding (liquidity). For example, strong credit growth associated with strongly rising real estate prices is often an indication of (future) instability.
We chair the Financial Stability Committee, which meets at least twice a year. At international level we participate in the International Monetary Fund (IMF), the European Central Bank (ECB), the European Systemic Risk Board (ESRB) and the Financial Stability Board (FSB). Our President Klaas Knot is the Vice-Chair of the FSB. Our participation in consultations in The Hague and Brussels is also important.
No. 1/2019: The quality and independence of residential property appraisals
No. 1/2017: The housing market in major Dutch cities
No. 4/2015: Dutch mortgages in the DNB loan level data
No. 2/2015: Effects of further reductions in the LTV limit
No. 8/2018: The price of transition: an analysis of the economic implications of carbon taxing.
No. 7/2018: An energy transition risk stress test for the financial system of the Netherlands.
No. 7/2018: Appendix - Modelling the energy transition risk stress test
No. 2/2016: Time for Transition - an exploratory study of the transition to a carbon-neutral economy
No. 6/2018: Size of the banking sector: implications for financial stability
No. 5/2015: Longevity Risk Transfer activities by European insurers and pension funds
No. 4/2017: Developing macroprudential policy for alternative investment funds
No. 5/2016: The Return on Equity of Large Dutch Banks
No. 3/2017: A top-down stress testing framework for the Dutch banking sector
No. 7/2015: Shedding a clearer light on financial stability risks in the shadow banking system
DNBulletin
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.
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“So far, no shock has been the Waterloo of our global financial system. But we need to remain vigilant. We need to remain diligent, in mapping, measuring, and monitoring vulnerabilities. Old and new.” This is what Klaas Knot said at Eurofi’s High Level Seminar 2023 in Stockholm.
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News item
In the first quarter of 2023, Dutch pension funds saw their funding ratios improve relative to the previous quarter, as growth in their investments outstripped the increase in liabilities.
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