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A number of economic/financial articles about the banking and financial activities are made freely available on a periodic basis. The articles are published in their original language.

  • Tuesday 26/3/2019
    Jean Deboutte

    The Eurosystem has spent 73.4 billion euros on Belgian Public Sector Securities between March 2015 and December 2018. It is believed that these purchases concerned mainly, if not entirely, Belgian OLOs issued by the federal government. Together with other non-standard measures taken by the ECB, this quantitative easing has exerted downward pressure on Belgian bond yields. Now that net buying of public sector securities has come to an end, it is worth looking at interest rate developments. Interest rates did not increase until now, and the federal government debt servicing costs which were for the first time lower than 2.0% of GDP in 2018, would further decline in 2019. Projections by the Belgian Debt Agency show that debt servicing costs would not materially rise, not even in the long term, when scenarios of rising rates are combined with very conservative debt management strategies.

  • Tuesday 26/3/2019
    Jan Leroy

    Flemish local authorities are in quite good fiscal condition at the start of the new local legislature, which runs from 2019 up to 2024. Although, big financial problems arise due to the growing expenditure for their statutory staff pensions. Without support by the other (regional and federal) central governments, local authorities might be obliged to cut in investment spending. This means that they wouldn’t be able to react properly to the important social and civic challenges coming from the society.

  • Tuesday 26/3/2019
    Gunther Wuyts

    Initial coin offerings (ICOs) extend the universe of funding sources for firms. Indeed, ICOs are a fast, cheap and convenient way to raise for firms. Also, they offer a number of potential benefits for investors such as access to a product or service or financial gain. Moreover, ICOs eliminate the need for a trusted intermediary by recording smart contracts in a public and immutable blockchain. Despite this claim and its advantages, however, ICOs still require a leap of faith from investors as important risks should not be overlooked.

  • Tuesday 26/3/2019
    NBB

    In recent years, the financial sector has been characterised by an increasing degree of digitalisation and the introduction of numerous new applications, processes or products under the impetus of technological innovations and changed preferences of the consumer. Digital transformation and fintech are concepts that are closely intertwined. They are characterised on the one hand by the entry into the market of new innovative service providers and on the other hand initiatives of existing institutions whereby the organisation, the processes, the service provision and the product range are improved through technological innovations. Fintech and digitalisation have a significant impact on individual banks but also on the sector as a whole. In order to gather a sector-wide insight into the important trends and evolutions regarding fintech and digitalisation in the Belgian financial landscape, the NBB has started an analysis, based on a survey among and discussions with Belgian banks, to solicit general insights into and observations about fintech, views on certain specific business models and technologies, and the concrete fintech strategy followed by Belgian banks. This report summarises the results of that analysis and wishes to contribute to raising awareness about the risks and opportunities of fintech. It also aims to share knowledge about the development of fintech in the Belgian banking sector, and to provide support to institutions in dealing with certain fintech-related challenges, by sharing best practices observed.

  • Tuesday 26/3/2019
    FSMA

    Crowdfunding entailing a financial return has gained ground in Belgium. Since 2012, different platforms of crowdfunding providing crowdlending, equity-based crowdfunding or both have emerged. In order to assess the scale and the characteristics of the existing crowdfunding market, the Financial Services and Markets Authority (FSMA) decided to conduct a survey of the five main crowdfunding platforms operating in Belgium: Lita.co, Ecco Nova, Look&Fin, Spreds and Bolero Crowdfunding. Each platform was surveyed about the crowdfunding campaigns launched during the period from January 2012 to December 2017. The objective of the present paper is to report the main findings of the analysis of the collected data. 

  • Tuesday 26/3/2019
    Preece & Kamerling

    Since the introduction of MiFID II in January 2018, asset managers and investment banks have weathered a shakeout in the investment industry as investment firms seek to recalibrate their research needs under the new regime. Although MiFID II has brought transparency and competition to the investment research business, a Europe-wide survey by CFA Institute on the outcomes of MiFID II one year on paints a picture of reduced research budgets and rising concerns over a perceived reduction in research quality and coverage. With indications that buy-side firms are in-sourcing research, pressure is mounting on independent and sell-side research providers. The investment professionals surveyed cite decreases in the number of analyst jobs and a scaling back of research coverage, with the small- and mid-cap equity sectors affected mostSince the introduction of MiFID II in January 2018, asset managers and investment banks have weathered a shakeout in the investment industry as investment firms seek to recalibrate their research needs under the new regime. Although MiFID II has brought transparency and competition to the investment research business, a Europe-wide survey by CFA Institute on the outcomes of MiFID II one year on paints a picture of reduced research budgets and rising concerns over a perceived reduction in research quality and coverage. With indications that buy-side firms are in-sourcing research, pressure is mounting on independent and sell-side research providers. The investment professionals surveyed cite decreases in the number of analyst jobs and a scaling back of research coverage, with the small- and mid-cap equity sectors affected most.

  • Tuesday 5/2/2019
    Vitor Gaspard

    Fiscal rules are important commitment devices to limit fiscal profligacy. They have been an integral part of the euro area architecture and were introduced to insure against weaknesses in the functioning of the market discipline. Nonetheless, they have failed to provide sufficient fiscal discipline and avoid excessive market volatility. However, despite prevalent noncompliance, rules did –on average– influence the behavior of fiscal authorities. The evidence shows that well-designed rules worked better than others. Elevated debt levels and the record of weak compliance and lax enforcement make fundamental reform of the EU fiscal rules more urgent than ever. These reforms should aim at making the rules simpler and more transparent, and better aligning political incentives with rule compliance.

  • Tuesday 5/2/2019
    Susanne Roehrig

    This article mainly summarises the content of a talk that Susanne Roehrig held at the Financial Forum in April last year. First it provides an overview of the general mechanics and relevant policies for the calculation of minimum capital requirements for credit risk. In the following the Article focuses on the assessment of capital requirements based on internal models (IRB) as mandated in Article 78 the CRD. This assessment includes a benchmarking exercise and entails tasks for EBA as well as for competent authorities. The methods and key results contained in EBAs report on the results from the 2017 Low defaults portfolios (LDP) exercise are summarised and some, more recently published results of the EBA Report on the results from the 2018 low and high default portfolios exercise are referred to. Lastly a possible amendment of the focus of EBAs benchmarking exercise as regards credit risk is discussed.

  • Tuesday 5/2/2019
    Johan Van Gompel

    Over the last three years, Belgium's public debt has fallen by more than 4 percentage points of GDP, after having risen sharply during the financial crisis. This reversal is good news and was mainly due to stronger economic growth and fiscal consolidation. However, at 103.4% of GDP, the debt ratio remained among the highest in the euro area in 2017. To further reduce the debt to a sufficient extent, the primary budget surplus should continue to build up in the short term to above 2% of GDP, in line with the target set in the Stability Programme. In the longer term, new savings should -preferably be made at the same time to offset the costs of an ageing population. Otherwise, a declining primary surplus threatens to ultimately increase the debt without it having sufficiently fallen towards the 60% level. To reduce the debt ratio structurally in the context of a normalisation of the current historically low interest rate, the growth potential of the economy will also have to be increased. Despite the still high debt, Belgium is maintaining market confidence. This is related to the relatively healthy position of the private sector, as a result of which the Belgian economy as a whole is in a very positive net asset position vis-à-vis the rest of the world.

  • Tuesday 5/2/2019
    Geert Gielens

    The budgetary situation of the local authorities in Flanders does not cause concern. Most municipalities recorded a surplus on their accounts at the end of last year and the municipal debt is also decreasing. A prudent spending policy axed at controlling the labour costs together with somewhat less investment spending are at the heart of this result. This being said, the future may be somewhat less rosy as rising pension costs and tax shift related lower municipal revenues are to be expected. 

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