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The credit crisis and the Dutch economy... in eight frequently asked questions


  • Michiel Bijlsma


  • Wim Suyker



Over the course of the past few years, too much credit has been made available worldwide, due to financial innovation, overly optimistic expectations and loophole-ridden regulation. Regulatory supervisors have failed because they were unable to prevent this situation. Things took a bad turn last year with ill-advised mortgages that were nevertheless granted to a great many American homeowners who were not credit-worthy As a consequence, banks suffered heavy losses. Subsequently, banks lost money on other products, which strongly undermined their capacity to extend credit. At the same time, mistrust increased among banks, while disquiet grew among bank clients. Governments worldwide rightly took steps to avoid a situation of massive bank failures. This would, as it did in the 1930s, lead to a deep recession and widespread unemployment. The Dutch government has thus far committed 30 billion euro in capital to banks, promised 200 billion euro in credit guarantees, and extended the legislation governing deposit insurance. This crisis will lead to major changes in the financial sector and in the regulation of that sector. In creating new legislation, governments should take care not to overshoot, since efficient financial markets stimulate both investment and innovation. While the recent interventions by the Dutch government have been necessary, it is desirable that the state moves as quickly as possible toward decreasing its stakes in the financial sector, in order to avoid harmful economic effects. This document is only available in Dutch.

Suggested Citation

  • Michiel Bijlsma & Wim Suyker, 2008. "The credit crisis and the Dutch economy... in eight frequently asked questions," CPB Memorandum 210, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:memodm:210

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    References listed on IDEAS

    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    2. Smith, Pamela J., 1999. "Are weak patent rights a barrier to U.S. exports?," Journal of International Economics, Elsevier, vol. 48(1), pages 151-177, June.
    3. Carlsson, Bo, 2006. "Internationalization of innovation systems: A survey of the literature," Research Policy, Elsevier, vol. 35(1), pages 56-67, February.
    4. George Gelauff & Arjan Lejour & I. Grilo, 2008. "Subsidiarity and economic reform in Europe," CPB Special Publication 73, CPB Netherlands Bureau for Economic Policy Analysis.
    5. George Gelauff & Sjef Ederveen & J.L.M. Pelkmans, 2006. "Assessing subsidiarity," CPB Document 133, CPB Netherlands Bureau for Economic Policy Analysis.
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    More about this item

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)


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