While calm has returned to the financial markets, the situation is still ‘fragile’, Dutch central bank president Nout Wellink told MPs on Wednesday.
Wellink was appearing before the parliamentary finance committee to answer questions on the credit crisis and its likely effect on the Netherlands.
Supervision of the American insurance market is still ‘on the weak side’, Wellink said. And while sub-prime risks are not a major problem for Dutch banks at the moment, if market turbulence persists or spreads, Dutch financial institutions could be hit harder, Wellink said.
Financial service sector watchdogs were not aware that such a tiny unregulated part of the US mortgage market could have be so influential, he said. ‘We did not know to what extent these poor products had become mixed into other products,’ he told the committee.
In documents published by the Financieele Dagblad ahead of Wednesday’s hearing, Wellink was also criticial of the dual role played in the crisis by credit rating agencies such as Moody’s and Standard and Poor’s.
The question is whether the credit rating firms can be impartial when they are paid by the very companies they are called upon to evaluate, Wellink said.
Earlier, investment strategist Michel van der Stee from Van Lanschot Bankiers told the committee that it was an illusion to think government intervention could solve the credit crisis. ‘You cannot solve the underlying problems with policy,’ news agency ANP reported him as saying.
ABN Amro investment chief Han de Jong said there is little to be gained by increasing supervision of the sector. ‘Give the market a chance to solve the problems,’ he said.
Thank you for donating to DutchNews.nl.
We could not provide the Dutch News service, and keep it free of charge, without the generous support of our readers. Your donations allow us to report on issues you tell us matter, and provide you with a summary of the most important Dutch news each day.Make a donation