‘Financial sector grew, as self-raising flour’ – NOS

The society has over the past decades to be dependent on the financial sector and that has led to major social problems. The socio-economic policy must therefore be reassessed to the society more resilient and the economy will be stronger.

“We must not give in to temptation after seven years of financial reforms to conclude that the main problems have been resolved and we can proceed to the order of the day.”

That sets the Scientific Council for Government policy (WRR), the main advisory body of the government, in the report ‘Society and financial sector is in balance’. The WRR calls for the tension between society and the financial sector to reduce.

self-rising flour

The financial sector is not an economic island, but an integral part of the society. In recent years, the sector as “self raising flour” and was more important than ever for consumers, businesses and financial markets.

The banking crisis has made painfully clear that the sector is far too large and too dominant. The interconnectedness with everything and everyone is great. The financial sector is in all parts of the society, so there is a huge connection between the housing market and mortgages, pensions and taxes.

The crisis has citizens and banks put against each other. Trust in bankers is low, and banks are primarily experienced as a “common enemy”. Banks “are back in the loft” and in their place is not easy.

mortgage interest deduction

The WRR does for that reason all kinds of recommendations for “the exposure of families, companies and semi-public institutions to financial dominance and dynamics to reduce”.

Financial uncertainty or a crisis can never be excluded, but the matter is that the society and economy, so banks, citizens and government, crisisbestendiger be, because we are still vulnerable.

Therefore advocates the WRR in the direction of the consumers for a reduction of the mortgage interest deduction. Parents need easier money able to borrow to the children and retirement needs can be used for a house and vice versa. Banks should again be supportive for the prosperity and economic growth, instead of subversive.

Renteniersnatie

“Dutch, we have to draw a renteniersnatie by high accumulated capabilities among the elderly, and substantial enforced pensioenpotten.” sets the WRR. That money could be more productively be used, so consumers are much less dependent on banks.

in addition, the bargaining power of citizens as consumers of financial services and products will be enhanced. The WRR wants more transparency, collective purchasing stimulate, and a larger role of “social watchdogs”, the organisations that stand up for the interests of consumers.

Semi-governments, schools, corporations and healthcare institutions have more advice and support needed at major financial decisions and investments. In the past they have been quite often to the leash of banks and property developers walked and stupid things done with complex financial products.

Connecting

The financial institutions themselves also have the necessary to do. There should be even stronger on the robustness of the sector is driven. Within banks have to be “fences” or “fire lanes”, to avoid problems when a part of the bank, the entire bank infect. They should consider how societal important activities secured can be.

Banks need to unlearn buffers can be seen only as a cost. Buffers are important and necessary. Bubbles should be prevented by the height of loans to limit. Thus, the so-called “loan-to-value ratio, the amount you can borrow is set off against the value of your home, and the loan-to-income’, the amount of the loan depending on the height of your income, both down. The Dutch central Bank is also calling for longer-for this versoberingen.

For more competition and less monopoly must be the new players in the financial world easier to be made to enter the market. The game – and prudential rules for large and small banks may in that respect, to the best different.

Consistency

And finally, there is also the necessary on the sign of politics. The government should be reluctant to click on developments in financial markets automatically respond with laws and regulations.

In times of prosperity, slacking the lines, in times of crisis, experience the magic of the measures on each other. Think of the low interest rates and the funding ratio of pension funds. The WRR calls for more coherence and consistency in policy.

An annual debate in the house about “the state of the financial system and the social resilience” could ensure more focus and a finger on the pulse.