And that boring thing is called “treasury banking.” This was introduced in 2013 and means that governments must store the money they do not need immediately – in other words if they have too much money – with the Ministry of Finance. But they can also lend that money to other governments. In this case, a province may lend money to municipalities or water boards. But one rule applies: provinces are not allowed to lend money to municipalities and water boards in their own province.
The loans are therefore not unique. For example, Velsen also borrows money from the provinces of Limburg and North Brabant, and the municipality of Amsterdam also borrows from other provinces.
“Every decentralized government, such as a municipality or province, still has regular bank accounts,” explains Lena van der Priem, spokesperson for the Ministry of Finance. “One of these accounts is ‘linked’ to treasury banking. If the governments have more money than an agreed amount, then this excess money is transferred to this specific account. The money is held by the ministry in the treasury account at De Nederlandsche Bank. “
This money remains with the relevant municipality or province. They can request this at any time. The ministry pays interest to the municipality and provinces on the money that is stored in the treasury. Six banks facilitate this treasury banking: ABN AMRO, BNG Bank, Deutsche Bank, ING, NWB Bank and Rabobank.
Since 2004, municipalities, provinces and water boards have been able to voluntarily participate in this form of banking. However, it became mandatory in 2013. It prevents a government from having to borrow money from the bank and paying costs for it, while another municipality has excess money at the bank.