Keep state assets and watch interest rates: central bank president

The Netherlands must keep a close eye on global interest rates and the government should not sell off banks such as ABN Amro, Dutch central bank president Klaas Knot told parliament on Thursday.

On the subject of interest rates, Knot said these are currently at an historical low in the Netherlands, partly because of measures taken by the US Federal Bank and the European Central Bank.

But he warned MPs this could change if the US economy revives before that of the EU. The Fed would then put up interest rates and this could mean a loss of up to €8bn for Dutch banks.

‘It is a huge risk for the Netherlands if interest rates suddenly rise,’ press reports quote Knot as saying. ‘This is why the government must stand firm in its policy of bringing down mortgage debt.’

‘The gradual reduction of mortgage debt is vital in getting down government debt,’ he told MPs.

No sell-off

Knot also responded to remarks earlier on Thursday by Bernard Wientjes, head of the employers’ association VNO-NCW.

Wientjes said the government should sell off the banks ABN Amro and SBS Reaal and other state-owned assets to raise money, rather than trying to find further spending cuts of €6bn from the 2014 budget.

‘This will not solve the problem,’ he told a press conference following his visit to parliament.

‘This plan would at most have an incidental effect on government debt. It would do nothing to close the gap in government finances,’ he said.

Knot thinks spending cuts are unavoidable to protect the Netherlands’ reputation as a credit worthy country.

 

 

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