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Until recently, supervision in the Netherlands was structured mainly by sector. The Central Bank (DNB) is responsible for supervision of banks, The Insurance Supervisor (VK) conducts supervision of life and non-life insurance, and of pension funds, whilst the Securities Supervisor (STE) is responsible for supervision of securities firms and exchanges. (Joosen, 2002, p. 17) Within this structure, the responsibility for systemic supervision mainly lay with the DNB, which combines the roles of central bank and bank supervisor, particularly where large banks and the payments system are concerned.

In the Netherlands’ financial system, securities-related activities may be performed by both securities firms and banks. Dutch law focuses on a specific activity instead of the institution that performs the activity. It is an example of objective based, cross-sector supervision. As a consequence, financial institutions such as banks are faced with two supervisors: the central bank for prudential supervision and the securities supervisor for securities supervision. Where this leads to overlap in jurisdictions, the two supervisors are obliged to come to harmonisation.

(Kremers, Kroes, Schoemaker, 2000, p. 159) This law has had other consequences too, mainly; it means that there is no distinction between a Savings bank, Commercial Bank and a Miscellaneous Financial Institution. Therefore, many Finance companies have been able to take advantage of this law as it gives them greater scope (by having the same privileges as banks) for raising short term debt. This made the Netherlands a haven for off-shore investors for a very long period of time.

However, the government has recently made amendments to the laws concerning the raising of funds and has put in certain conditions that must be observed. (Van Rossum, 2002, p. 49) The emergence of cross-sector financial institutions brings with it an increased need for co-ordinated supervision and this will be one of the challenges faced by the Netherlands as more and more complex products are being used by firms in many different sectors. The Netherlands can be seen as having a progressive and innovative banking system.

Its regulatory structure has been able to consistently provide financial stability to the markets as well as a level playing field to both local and off-shore banks. The Netherlands has been able to consistently implement new changes in laws smoothly and effectively, leading to sound transition in the markets. Its economic significance to Europe through trade will continue to see the Netherlands as a hub for the movement of funds, and so the banking system and financial markets will likely continue to achieve the high levels of prosperity enjoyed in the past.

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