News item | 22-12-2023 | 14:42
The Dutch Central Bank (DNB) expects extensive losses in the coming years, between 2023 and 2028, which may mean that its buffers will be negative for several years. This is caused by deteriorating economic conditions, the consequences of the war in Ukraine and the pandemic. DNB is incurring losses due to the rapidly rising interest rates, intended to combat inflation. Other major central banks are also dealing with this.
At the proposal of a joint working group of the Ministry of Finance and DNB, it is now stipulated, among other things, that no dividend will be paid to the State if DNB’s buffers are negative. This was already the current practice, but now this policy is being established. The Council of Ministers agreed to this on the proposal of Minister Kaag of Finance.
For Minister Kaag and President Knot of DNB, the losses were reason enough to bring forward the five-yearly evaluation of DNB’s capital policy by one year. A joint working group of the Ministry of Finance and DNB has examined DNB’s capital policy.
The working group concludes that DNB’s capital policy is sustainable. They therefore do not propose any major substantive changes. The losses have no effect on the performance of DNB’s supervisory tasks and monetary role. The working group expects that DNB will restore its buffers on its own by no longer paying out profits for the time being. A capital contribution from the State to DNB is therefore not an option.
It is expected that the buffers will be sufficiently restored from mid-2030 to pay dividends to the State. DNB has not paid a dividend to the State in recent years, so the change in capital policy has no additional budgetary impact.