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Business and Economics > Banks and Banking

You are looking at 1 - 10 of 190 items for :

  • Type: Journal Issue x
  • Netherlands, The x
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Cover IMF Working Papers
Beyond the Dikes: Flood Scenarios for Financial Stability Risk Analysis
Caterina Lepore
and
Junghwan Mok
We assess financial stability risks from floods in the Netherlands using a comprehensive set of flood scenarios considering different factors including geographical regions, flood types, climate conditions, return periods, and adaptation. The estimated damage from each flood scenario is used to calibrate the corresponding macro-financial scenario for bank stress tests. Our results show the importance of considering these heterogeneous factors when conducting physical climate risk stress tests, as the impact of floods on bank capital varies significantly by scenario. We find that climate change amplifies the adverse impact on banks’ capital, but stronger flood defenses in the Netherlands can help mitigate some impacts. Further, we find a non-linear relationship between flood damages and banks’ capital depletion, highlighting the importance of considering extreme scenarios.
Keywords:
Physical risk; flood scenario; banking stress test; climate risk analysis; climate risk stress tests; bank capital; Natural disasters; Climate change; Commercial banks; Housing prices; Stress testing; Global
Cover IMF Working Papers
Bank Profitability in Europe: Not Here to Stay
Ruo Chen
,
Vincenzo Guzzo
,
Fazurin Jamaludin
,
Adil Mohommad
,
Ritong Qu
, and
Yueshu Zhao
Slower passthrough of policy interest rate hikes to deposit rates relative to their loan rates has led to sharply wider bank net interest margins. Combined with resilient asset quality, wider net interest margins supported record profits for European banks in 2023. Drawing on historical data from the balance sheets and income statements of over 2,500 European banks, this paper shows that abnormally high profits are expected to fade soon as interest income will decline, once policy rates start being lowered, while higher impairment costs historically have weighed on profits with a lag. Moreover, a number of structural factors that have eroded the performance of European banks in the past two decades have largely remained unaddressed and will continue being a drag on profits and capital. Therefore, policymakers should encourage banks to preserve capital buffers and build resilience to future shocks, while exercising caution when considering taxes on profits or other measures that could divert potential sources of capital from banks.
Keywords:
European banks; bank profits; interest rate margins; asset quality; bank capital; bank taxation.; bank profit; interest rate margin; bank taxation; impairment cost; Bank soundness; Financial statements; Income; Yield curve; Central bank policy rate; Europe; Global
Cover IMF Staff Country Reports
Kingdom of the Netherlands-The Netherlands: Financial Sector Assessment Program- Technical Note on Climate Risk Analysis
International Monetary Fund. Monetary and Capital Markets Department
This paper presents a technical note on climate risk analysis in The Netherlands. The Netherlands is exposed to both physical and transition risks from climate change. This Financial Sector Assessment Program FSAP analyzed potential risks to financial stability posed by physical risks from floods and transition risks from nitrogen. In order to assess physical climate risks, bank stress tests were conducted against flood events under a range of scenarios encompassing diverse regions, climate conditions, and flood protection reinforcement plans with different return periods. Despite the sizeable land area in the Netherlands susceptible to flooding, the physical climate stress test has demonstrated that the banking sector exhibits resilience to flood events. As the government’s efforts to reduce nitrogen depositions continue, the banking sector could face transition risks through the credit channel, particularly if loans are extended to financially vulnerable firms in high nitrogen-emitting sectors. The Dutch government should strengthen data sharing and collaboration with floods and climate experts. Flood scenarios designed with detailed flood maps under future climate conditions would provide a more accurate assessment of both climate change impact and adaptation measures.
Keywords:
risk analysis; statistics Netherlands; flood scenario design scheme; types classification; B. flood scenario; nitrogen emission intensity; Natural disasters; Climate change; Insurance companies; Commercial banks; Global
Cover IMF Staff Country Reports
Kingdom of the Netherlands-The Netherlands: Financial Sector Assessment Program- Technical Note on Macroprudential Policy Framework
International Monetary Fund. Monetary and Capital Markets Department
This paper presents a technical note on macroprudential policy framework in The Netherlands. The Financial Sector Assessment Program recommendations aim to address observed gaps and further strengthen the Netherlands’ macroprudential policy framework. Macroprudential policy in the Netherlands has centered on the residential real estate market given the importance of this market for households, banks, and insurers. The current institutional arrangement is broadly in line with IMF guidance for effective macroprudential policy. Surveillance and systemic risk assessment rely on comprehensive quantitative information and on various property market models and stress tests. The willingness to act and the ability to act over the calibration of the borrower-based tools are, however, considered weak. The authorities recently increased the differentiation of the transfer tax to improve the position of owner-occupiers relative to that of buy-to-let investors, but the measure should be calibrated cautiously. Supply-side measures remain critical to limit house price pressures and improve access to homeownership.
Keywords:
infrastructure regulation; property market; mortgage interest deductibility; statistics Netherlands; markets authority; Mortgages; Housing prices; Financial sector stability; Macroprudential policy; Macroprudential policy instruments; Global
Cover IMF Staff Country Reports
Kingdom of the Netherlands-The Netherlands: Financial Sector Assessment Program- Technical Note on Securities Regulation and Supervision
International Monetary Fund. Monetary and Capital Markets Department
This paper describes a technical note on securities regulation and supervision in The Netherlands. Regulation of securities and derivatives markets in the European Union (EU) has changed materially since the last Netherlands Financial Sector Assessment Program (FSAP), with further reforms underway. The securities market landscape in the Netherlands has also changed markedly since the last FSAP, largely in response to Brexit. The Netherlands is now of EU-wide significance in relation to the trading of securities, particularly equities, which has brought challenges for the national authorities. Further enhancements of its approach and a continuing focus on trading system operational resilience are now needed. The established venues are growing and diversifying their offerings, and ‘fintech’ new entrants with business models combining trading and post-trading operations in new ways are on the horizon. Enhancements to the legislative framework are now needed to ensure that the Autoriteit Financiële Markten can continue to supervise efficiently and effectively an expanded and more diverse market, and to engage credibly with international counterparts.
Keywords:
trading venue; managers directive; markets authority; trading obligation; money market funds; Financial Sector Assessment Program; Liquidity management; Liquidity; Liquidity risk; Financial derivatives; Europe; Global
Cover IMF Staff Country Reports
Kingdom of the Netherlands-The Netherlands: Financial Sector Assessment Program- Technical Note on Banking Supervision
International Monetary Fund. Monetary and Capital Markets Department
This paper presents a technical note on banking supervision in The Netherlands. Supervision of less significant institutions is effective in the Netherlands. The Financial Sector Assessment Program encourages De Nederlandsche Bank (DNB) to maintain its proactive and creative approach, and proposes some extensions to solidify this practice. DNB and the Autoriteit Financiële Markten should also continue the rigorous practice in IO Mortgage supervision, while further emphasizing the quality of inputs for risk managements of banks, in particular, updated clients’ disposable incomes and collaterals’ values, and motivating banks to improve risk controls and the data aggregation process. Going forward, supervision must reflect a changing market landscape and rapid deployment of new technologies.
Keywords:
staff team of the International Monetary Fund; asset quality; LSI supervision; banking sector in The netherlands; risk-weighted assets; Mortgages; Credit risk; Bank supervision; Liquidity requirements; Loans; Global
Cover IMF Working Papers
Monetary Policy Pass-Through to Interest Rates: Stylized Facts from 30 European Countries
Robert C. M. Beyer
,
Ruo Chen
,
Florian Misch
,
Claire Li
,
Ezgi O. Ozturk
, and
Lev Ratnovski
The extent to which changes in monetary policy rates lead to changes in loan and deposit rates for households and firms, referred to as ‘pass-through’, is an important ingredient of monetary policy transmission to output and prices. Using data on seven different bank interest rates in 30 European countries, different approaches, and the full sample as well as a subsample of euro area countries, we show that a) the pass-through in the post-pandemic hiking cycle has been heterogenous across countries and types of interest rates; b) the pass-through has generally been weaker and slower, except for rates of non-financial corporation loans and time deposits in euro area countries; c) differences in pass-through over time and across countries for most deposit rates are correlated with financial sector concentration, liquidity, and loan opportunities, and d) the effects of pass-through to outstanding mortgage rates on monetary transmission on prices and output are heterogenous across countries.
Keywords:
Monetary Policy Transmission; Monetary Policy Pass-Through; NFC loan rate; pass-through to rate; transmission to output; Deposit rates; Central bank policy rate; Mortgages; Loans; Financial sector; Europe
Cover IMF Staff Country Reports
Slovak Republic: Technical Assistance Report-Implementing Public Expenditure Limits
International Monetary Fund. Fiscal Affairs Dept.
This Technical Assistance Report on Slovak Republic discusses implementing public expenditure limits (PEL). The main objective behind the introduction of the PEL is to create an operational instrument to strengthen fiscal discipline and fiscal sustainability. The introduction of the PEL provides an opportunity to move beyond the annual budget and take strategic budgeting a step further into the medium term. To strengthen the budget process, the report proposes a strategic phase to the budget process, currently lacking, which could start with a Fiscal Strategy Report outlining fiscal challenges and policy options for consideration by the Council of Ministers. Based on the recommendations in this report, the current caretaker government has a unique opportunity to propose an agenda of public financial management reforms to the new government that will emerge from the elections in September. These recommendations rely heavily on the experience of countries that have to some extent successfully implemented PEL and progressively moved toward medium-term budgeting. Further detailed work will be needed in many of the above areas to flesh out the precise laws, decrees, regulations, or processes that will need to be changed to kick start the reforms.
Keywords:
State secretary; PEL methodology; budget chapter; state budget; authorities of the Slovak Republic; Value-for-Money Unit; Budget planning and preparation; Budget execution and treasury management; Fiscal space
Cover Policy Papers
Poverty Reduction and Growth Trust—2023 Borrowing Agreements with the Government of Australia, the People’s Bank of China, the Bank of Finland, the Banque De France, De Nederlandsche Bank NV, the Norwegian Ministry of Finance Representing the Kingdom of Norway, Sveriges Riksbank, and the Government of the United Kingdom
International Monetary Fund. Finance Dept.
and
International Monetary Fund. Legal Dept.
This paper presents the second set of PRGT borrowing agreements that have been finalized through April 2023 as part of the loan mobilization round launched in July 2021 to cover the cost of pandemic-related lending and support the self-sustainability of the Poverty Reduction and Growth Trust (PRGT). Seven of the eight agreements presented use SDRs in the context of SDR channeling. Together these agreements provide a total of SDR 5.1 billion in new PRGT loan resources for low-income countries (LICs).
Keywords:
PRGT Borrowing agreements; PRGT Loans; Poverty Reduction and Growth Trust (PRGT); Concessional financing; Resource adequacy; PRGT Funding; Contributions; Transparency policy; SDR equivalent; channeling pledge; totaling SDR; PRGT loan disbursement; loan resource; Loans; Poverty reduction strategy; SDR interest rate
Cover IMF Working Papers
Raising Rates with a Large Balance Sheet: The Eurosystem’s Net Income and its Fiscal Implications
Nazim Belhocine
,
Mr. Ashok Vir Bhatia
, and
Jan Frie
The Eurosystem, having purposefully expanded its footprint in recent years, confronts a period of loss-making as rising policy rates lift the remuneration of bank reserves while assets churn more slowly. This paper projects the net income of the Eurosystem and its “top-five” national central banks over a ten-year horizon, finding that losses, while large, will be temporary and recoupable. The policy conclusions are fourfold. First, the temporary and recoupable nature of the loss-making obviates any need for capital contributions or indemnities from the state, instead allowing losses to be offset against future net income. Second, it must nonetheless be communicated that fiscal impacts will be material, with annual taxes and transfers of 0.1−0.2 percent of GDP giving way to potentially long interruptions in some cases. Third, more-conservative profit distribution policies in the future steady state could help mitigate the on-off pattern of dividends. Finally and most vitally, loss-making must remain orthogonal to monetary policy decision-making, as indeed it is at the ECB. Ultimately, credibility will rest on performance in delivering on the price stability mandate.
Keywords:
Eurosystem; balance sheet; monetary policy; profit distribution; seigniorage; central bank independence; ECB Policy; net purchase; QE portfolio; selected NCBs; Eurosystem's net income; rate path; pooling reference rate; distribution policy; Income; Financial statements; Unconventional monetary policies; Central bank policy rate; Global; Europe