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The Dutch Credit Guarantee Scheme (Netherlands GFC)

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Abstract

As fallout from the global financial crisis intensified in October 2008, governments around the world sought to implement stabilization measures in order to calm and protect their domestic markets. While not directly exposed to the subprime mortgage crisis, the Kingdom of the Netherlands announced the creation of the Dutch Credit Guarantee Scheme (the Guarantee Scheme) on October 13, 2008, to boost confidence in interbank lending markets and to ensure the flow of credit to Dutch households and companies. In establishing this program, the Dutch State Treasury Agency of the Ministry of Finance (DSTA) committed EUR200 billion to support the issuance of debt to be guaranteed by the government. Dutch financial institutions meeting liquidity and solvency requirements enforced by De Nederlandsche Bank, including foreign subsidiaries established in the Netherlands with substantial business in the country, were eligible to apply for coverage under the Guarantee Scheme. Initially, only newly issued "plain vanilla" commercial paper, certificates of deposit, and fixed- or floating-rate medium-term notes with maturities of between three months and three years could be guaranteed. Additionally, debt instruments would need to be denominated in euros, US dollars, or pounds sterling. Between October 23, 2008, and December 1, 2009, the Guarantee Scheme was utilized by six Dutch financial institutions for a total utilization of EUR54.2 billion. No guaranteed debt was issued after December 1, 2009. The issuance window, though originally set to expire December 31, 2009, was extended twice, to December 31, 2010. No institutions defaulted on any guaranteed debt.

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  • Engbith, Lily, 2020. "The Dutch Credit Guarantee Scheme (Netherlands GFC)," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 2(3), pages 809-825, April.
    • Handle: RePEc:ysm:ypfsfc:234242
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    1. Aviram Levy & Sebastian Schich, 2010. "The Design of Government Guarantees for Bank Bonds: Lessons from the Recent Financial Crisis," OECD Journal: Financial Market Trends, OECD Publishing, vol. 2010(1), pages 35-66.
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    More about this item

    Keywords

    The Netherlands; short-term debt; medium-term debt; credit institutions; government guarantee;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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