Author: Teunis

Het in de afgelopen jaren ingezette beleid kan niet ­verhinderen dat de hypotheekschuld flink verder zal oplopen. Dit schrijven Senne Janssen en ik in een ESB-artikel o.b.v. verschillende scenario’s van ons woningmarktmodel. Maar de uitstaande hypotheekschuld zal wel licht dalen in verhouding tot het bbp.

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Today, professor Dirk Bezemer gave his inaugural address on the “Debt shift” at Groningen University. For the occasion, a seminar was organised at which I was invited to discuss a bank’s perspective on managing high private debt. Slides below, here are my main points

• Private debt has grown tremendously in past decades. Not all good.
• Stock vs flow: 2008 was shock to flows, but high debt stock still there
• On flows: Banks have throttled back. Non-bank lending has partly stepped in
• Tempting to identify global/advanced-economy trends, yet important differences between countries
• Housing plays important role, being most important collateral for credit
• External constraints on credit-housing feedback loop necessary
• Experience in NL: constraints in code of conduct and law
• Further steps since 2008: tax reform, enhanced LTV price differentiation by lenders, LTV cap
• But is that enough?
• In my opinion, market failure makes institutional constraints necessary: macropru
• Macropru has major challenges: economic, political. Yet we need to try.
• Much broader view necessary: e.g. construction policy, rental market, room for first-time-buyers

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De afgelopen weken zijn de lange rentes in de Eurozone wat omhoog gekropen. Ze zijn overigens nog steeds bijzonder laag: de Nederlandse overheid kan nu voor 0,5% tien jaar lenen. De geldmarktrentes in Europa hebben nog niet bewogen: de driemaands euribor is nog net zo -0.3% als hij al een maandje of wat is.

Kortom, de lage-renteproblematiek is in feite niet minder nijpend dan hij een maand geleden was. Die lage rente heeft potentieel grote effecten op de inkomsten en uitgaven van een bank. De bankbalans gedraagt zich hierbij als een groot containerschip: veranderingen in de rente hebben maar heel langzaam effect. Dat betekent dat terwijl de ECB de rente al 2½ jaar lang onder nul heeft staan, de volle negatieve impact daarvan op banken nog moet komen. Dat containerschip betekent ook dat, als de marktrentes echt gaan stijgen, het even kan duren voordat banken hier de positieve effecten van merken.

In onderstaand rapport staan de mogelijkheden uiteengezet die banken hebben om de gevolgen van de lage rente op te vangen.

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In recent years, banking markets in the Eurozone have seen major changes linking them closer together. The Banking Union has brought, among other things, a new Single Supervisor and steps towards a Single Rulebook. These changes were driven by a desire to strengthen financial stability and bank resolvability, reducing risks for taxpayers. But closer integration of banking markets can also lead to fiercer competition, delivering Europeans better services at lower prices.

In this report, we assess the degree of integration across the Eurozone’s banking markets in a number of fact sheets. We find that banking remains strongly compartmentalised along national borders. While acknowledging the very important steps that have already been taken, we conclude that the Eurozone’s banking markets remain highly fragmented. This means that from a financial stability and a competition perspective, Europe is missing out on opportunities. Households and businesses stand to gain from further integration of the Eurozone’s banking markets.

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Rhetorical question.

In a presentation at the Dutch ‘Economists’ Day’, I argued that

• The system of lending and money creation can become ‘self-inflatable’;
• The revival of (gross) bank lending has, so far, mostly been in mortgages. Little movement in lending to finance inventories or investment;
• Eurozone countries are already highly dependent on bank financing;
• More generally, debt levels are still very high, is it really wise to stimulate economic agents to take on more?
• isn’t the (relative) lack of risk-bearing capital a more pressing issue?
• Even more generally, access to finance is no longer the biggest worry entrepreneurs have.

See the slides below:

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