State guarantees loans to banks

News item | 14-10-2008

The Dutch state will stand surety, under certain conditions, for loans between banks and for loans made to banks by institutional investors. This measure is designed to revive the flow of funds between financial institutions.

Prime minister Jan Peter Balkenende made this announcement at a press conference. He explained how the Netherlands will implement the agreements made by the euro countries in Paris on 12 October 2008.

At this summit, a two-pronged approach was agreed: to provide capital and to guarantee loans to banks.

The Netherlands had already decided to provide capital resources on 9 October 2008, when finance minister Wouter Bos announced that, where necessary, the Netherlands will strengthen healthy financial undertakings through capital injections. Twenty billion euros were made available immediately.

State guarantees

The euro countries also agreed measures to revive the flow of funds on the financial markets, with a view to restoring confidence. The present lack of confidence is preventing companies from obtaining medium-term loans.

The government is willing, subject to certain conditions, to stand surety for some of these loans. It expects that the state will have to guarantee loans to the tune of 200 billion euros.

The arrangement for state guarantees will take effect within a few days.