The Dutch Central Bank (De Nederlandsche Bank, DNB) recently published its supervisory priorities for the years 2018 to 2022 in the form of two documents:
- the ‘Supervisory Strategy 2018 – 2022’ (the Supervisory Strategy); and
- the ‘Supervision Outlook for 2018’ (the Supervision Outlook).
In these two documents, DNB identifies the priority themes that it will address in the coming years in addition to its ongoing supervision. According to DNB, the Supervisory Strategy and the Supervision Outlook are compiled in dialogue with the financial sector. In the accompanying press release, DNB states that over the past decade following the crisis, the financial sector has undergone a necessary transition to increase its financial resilience and that the Dutch economy has been recovering in recent years. However, DNB also points out that the crisis has nevertheless demonstrated that financial institutions and regulatory authorities alike must never cease to be alert to new risks and challenges. In this respect DNB makes a reference to new parties entering the financial markets using innovative technologies, the pressure on existing business models due to continued low interest rates and the impact of Brexit on financial institutions.
The Supervision Outlook sets out the sector-wide priorities that DNB has identified in the Supervisory Strategy. Among other things, in 2018 DNB will continue to expand its regulatory sandbox as a response to technological innovation if existing legislative and regulatory requirements causes unnecessary constraint for new market parties. The priority “future orientation and sustainability” mentioned in the Supervisory Outlook involves examinations into the change capacity of financial institutions, climate-related risks, and unintended effects of legislation and regulations. Another focus area included in the Supervisory Outlook referred to as “taking a hard stance against financial and economic crime”, means that DNB anticipates further efforts in preparing the financial sector for legislative and regulatory changes, the systematic integrity risk analysis, and combating terrorist financing.
DNB has pointed out that in 2018 it will focus on specific areas in its supervision not only across the sector but also within the various individual sectors:
- Banks: reassessing the quality of their internal models, examining their credit risks and preparing a new international stress test.
- Insurers: the opportunities and risks arising from InsurTech and insight into technical provisions and experience mortality.
- Pension funds: in-depth examination into their future orientation and the soundness of their administration amid increasing digitisation.