Credit crunch

In 2008, the United States was hit by a credit crisis after banks suffered losses on their mortgage portfolios. Due to the global interconnectedness of the financial world, European banks ran into trouble as well following the collapse of the Lehman Brothers investment bank. In the Netherlands, central government introduced all types of support interventions as of 2008 in a bid to ensure stability in the financial market.

Among these measures was the nationalisation of Fortis Nederland. In addition, the government provided capital to banks including ING Bank, Aegon (financial services organisation, tr.) and SNS Reaal Bank. The government ultimately faced the need to take further interventions, including taking over ING Bank’s US mortgage portfolio and nationalising SNS Reaal Bank. Finally, the government provided a guarantee scheme to financial institutions as well as compensation for Icesave depositors, although the latter two interventions only had a minimal effect on the government debt level.

Just as the Netherlands and many other European countries were fighting the consequences of the credit crisis, at the end of 2009 the eurocrisis emerged in Greece. When it became known that the Greek government had painted a brighter picture of government finances than the reality, interest on Greek government bonds grew explosively. Other euro countries, too, got into trouble. Ireland in 2010, Portugal in 2011 and Spain and Cyprus in 2012. Due to all kinds of support measures taken by EU member states, the IMF and the ECB, financial market confidence improved in these countries. In response, these countries introduced financial reforms.