NOSDNB-president Klaas Knot
NOS Nieuws•vandaag, 18:18
The Dutch Central Bank has suffered a loss of billions. This amounts to 3.5 billion euros, a record. DNB President Klaas Knot calls reporting such a loss “of course a not very joyful activity, I would have preferred to see it differently”.
This means that DNB cannot pay a dividend to the sole shareholder, the Dutch State, for the second time in a row. The central bank had seen the loss coming and set aside money to absorb it. But that turned out to be insufficient. The buffers for other unforeseen circumstances also had to be used for 1.1 billion euros.
Easily earned
The loss is mainly due to the high ECB interest rate. Banks are obliged to deposit part of their money with DNB, and now receive an interest rate of 4 percent for this. The commercial banks together earned 7.5 billion euros in interest payments and made good profits themselves.
That is easily earned, Knot admits, but according to him you have to look at the development over several years. “Then it is true that the low interest rate policy of recent years has significantly reduced the interest income of the banks, because they could not charge the negative interest rate.”
Dismissal
It is the first time since 1931 that DNB has suffered a ‘significant loss’. Then the central bank unexpectedly ended up 30 million guilders in the red (converted and adjusted for inflation 330 million euros). This was because the British central bank abandoned the gold standard and DNB was left with worthless British pounds. “It cost my predecessor his life,” Knot laughed at the presentation of the annual report. He doesn’t seem afraid of that himself.
So far, the Dutch state has mainly made money from the ECB’s low interest rate policy, mainly because the state was able to borrow money extra cheaply. According to DNB’s own calculations, this saved 28 billion euros in interest costs. And DNB also earned extra when interest rates were low, which also benefited the Dutch state. Since 1999, the treasury has received more than 16 billion euros in dividends from DNB.
Uncomfortable
DNB expects them to remain in the red until 2028. The question is what happens when the buffers run out. Should the Dutch state then match? Knot doesn’t think so. “If I had to choose between asking The Hague for money or continuing with negative equity, I would choose the latter.” That is also possible, because a central bank cannot go bankrupt.
Knot finds it uncomfortable for the central bank’s independent position if he had to turn to politicians for money. But there is still plenty in cash for the coming years, he says. And if it does come to that, Knot will not live to see it. His term ends next year. Klaas Knot has been president of De Nederlandsche Bank since 2011.
2024-03-14 17:18:31
#Mega #loss #DNB #state #support
