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Business and Economics > Finance: General

You are looking at 1 - 10 of 120 items for :

  • Type: Journal Issue x
  • Netherlands, The x
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Cover Global Financial Stability Notes
Pension Funds and Financial Stability
This Global Financial Stability Note examines the growth of the pension fund sector and the potential financial stability implications. Historically, pension funds have been seen as a contributor to financial stability because of their long-term and well-diversified liabilities. However, the sector has undergone significant structural shifts accelerated by a prolonged period of low interest rates, increasing its exposure to traditional risks while introducing emerging risks; this is reflected in growing intra-financial sector interconnectedness and exposure to long-term sovereign bonds. The recent transition to higher interest rates should be positive for the pension sector, albeit its pace and abruptness has been associated with liquidity stress and contagion risks in some countries.
Keywords:
Pension Funds; Financial Stability; Assets; Risks; Pension Plans; major pension fund sector; IMF Library; major pension savings market; structural liquidity; asset-liability duration mismatch; risk analysis; Pension spending; Pensions; Financial sector stability; Liquidity risk; Global
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 Supervision and Disclosure of Climate-Related Risks
International Monetary Fund. Monetary and Capital Markets Department
This paper presents a technical note on supervision and disclosure of climate-related risks in The Netherlands. Similar to other jurisdictions, the integration of climate-related risks into supervisory processes in the Netherlands faces various challenges. Supervision has been proactive in researching exposures to climate-related risks as well as designing tools to assess how financial institutions identify, monitor and manage these risks. Supervisors have been gradually developing approaches and methodologies to support the supervisory process. Many of these initiatives and projects have been influential in the international debate on climate risk supervision. The authorities need to translate strategic measures into a concrete roadmap to ensure that the process of setting up climate risk supervision is systematic and continues at a sufficiently ambitious pace. Going forward, climate risk supervision must strengthen quantitative tools and data sets. The note provides the main recommendations to enhance the supervision of banking and insurance activities conducted in the Netherlands with a direct bearing on its financial stability.
Keywords:
Rijksdienst voor Ondernemend Nederland; climate risk analysis; solvency ASSESSMENT; staff team of the International Monetary Fund; nitrogen in the Netherlands; Climate change; Natural disasters; Insurance companies; Climate finance; 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 Systemic Risk Analysis
International Monetary Fund. Monetary and Capital Markets Department
This paper presents a technical note on systemic risk analysis in The Netherlands. The banking sector appears resilient to adverse macrofinancial shocks assuming no policy reactions, but some vulnerabilities exist. The insurance solvency stress test evidenced a broad resilience of the Dutch insurance sector, particularly for property & casualty and health insurers, while vulnerabilities exist for some life insurers. The Financial Sector Assessment Program (FSAP) team also carried out an analysis of household and corporate sector resilience, and of the commercial real estate market. Life insurers are broadly resilient to liquidity shocks despite large interest rate swap positions. Assuming a euro interest rate increase of 100 basis points, margin calls are sizable, but the sampled entities apply heterogenous strategies and draw on a variety of different sources for their liquidity, including cash and deposits, uncommitted repo facilities, and the sale of money-market funds. The FSAP recommendations aim to address observed gaps and further strengthen the Netherlands’ systemic risk analysis framework.
Keywords:
solvency-liquidity analysis; insurance solvency stress test; pension fund liquidity risk analysis; coverage ratio; Si liquidity stress test; pension fund solvency analysis; Mortgages; Stress testing; Loans; Housing prices; Pension spending; Global; Europe
Cover IMF Staff Country Reports
Kingdom of the Netherlands-The Netherlands: Financial Sector Assessment Program- Technical Note on Insurance and Pension Fund Regulation and Supervision
International Monetary Fund. Monetary and Capital Markets Department
This paper highlights a technical note on insurance and pension fund regulation and supervision in The Netherlands. The Dutch insurance sector is undergoing further consolidation, the life sector has been steadily shrinking over the last two decades, and the non-life market is relatively saturated. Investment exposures to real estate are increasing, and Dutch insurers are large providers of mortgage loans. Solvency ratios of Dutch insurers are well above the regulatory threshold, but below the EU average and furthermore distorted by the mechanics of the ‘Long-Term Guarantee Measures’ in Solvency II. The Dutch pension system—considered to be among the best according to international comparisons—rests on three pillars. Most pension schemes are defined-benefit pensions, which have come under pressure since 2008, when low interest rates resulted in declining funding ratio and led to an overall loss in confidence in the system. The Dutch system for independent state agencies, including De Nederlandsche Bank and Autoriteit Financiële Markten, carefully balances powers and accountability. Supervision of insurers and pension funds is effective in the Netherlands.
Keywords:
insurance regulation regime; pension fund regulation; solvency Assessment; International Monetary Fund Washington, D.C.; pension fund Sector; organization of Supervision; FSAP's finding; Pension spending; Insurance companies; Pensions; Insurance; 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 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