The necessity for Plan ฿ (part 1): DNB prepares banks for correction of housing market

Bitcoin and the global economy are inextricably linked. The crypto currency has been developed as a counter-reaction to the 2008 economic crisis. For many, bitcoin therefore serves as a Plan ฿.

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1 Banks must hold more reserves for mortgages

2 Related posts:

At the moment it seems to be going well economically, but more and more signs point to a new recession. From today, therefore, we explain a topic from the macro-economy every Tuesday and Friday. So we don’t forget why bitcoin was developed.

We kick off with the housing market. De Nederlandsche Bank (DNB) has taken a special measure.

Banks must hold more reserves for mortgages

Dutch banks have to hold three billion euros more in capital for mortgages. DNB announced this today in a press release. The measure is planned for the autumn of 2020, for a period of two years.

This measure is not nothing, it is one of the pillars to make banks more resistant to a possible crisis. There are many international issues that could cause a new economic crisis. Consider, for example, the consistent printing of money (quantitative easing) and the negative interest rate. Political tensions such as the Brexit and the trade war between the US and China also play a role.

The housing market is a dormant problem in the Netherlands. According to the DNB, there is a chance that house prices will be corrected in the near future.

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There is talk of overvaluation, at the moment houses are relatively expensive. On average, the prices of houses increase by eight percent per year. Perhaps the pinnacle was this terraced house in Amsterdam of 1.5 million euros. The broker’s reaction? “The price is in line with the market.”

According to DNB, house prices are rising faster than Dutch incomes. The ratio between the price of a house and the income is therefore increasingly skewed. Much more skewed than during the previous peak in the housing market. Buyers are taking more and more risk with their mortgage and the mortgage debt is getting higher.

This problem takes place in the shelter, but it is incredibly important. The DNB measure must alleviate a possible new economic crisis. Or that this time it will work?