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Netherlands provides 20 billion euros for financial sector

(Xinhua)
Updated: 2008-10-10 17:09

BRUSSELS -- The Dutch government has made 20 billion euros (about $27.2 billion) available for the financial sector to restore confidence between financial institutions.

The Dutch Finance Ministry and the central bank took the joint measures to  protect companies that are "fundamentally healthy and viable" against the shocks of the current financial turmoil, the Dutch Finance Ministry said in a press release on its website.

The capital injection by the government can take various forms, including exchange for the companies' shares. The emergency measures should cause minimum disruption of market competition and the financial risks for the government should be limited, the ministry said.

The central banks of the euro zone countries and the European Central Bank have already taken measures to boost confidence in the financial sector. The Dutch central bank is ready to grant credit to financial companies to help with their short-term financing, the ministry said.

"These measures will contribute to a solid base for financial companies and strengthen confidence in the Dutch financial system and the stability of the international financial system," the press release said.

Announcing the measures late Wednesday night, Dutch Finance Minister Wouter Bos said money circulation in the Dutch market has been largely stalled because banks no longer trust each other. "The old Dutch saying is true: money should roll," Bos was quoted by Dutch media as saying.

The emergency measure is valid for a year. Banks and insurers that want to use the scheme must meet conditions.

Dutch central bank governor Nout Wellink said the 20 billion euros is not a fixed amount. The final amount will depend on the number of banks and insurers that resort to the scheme.

The Association of Dutch insurers has welcomed the government's move, calling it a "proactive approach". It said the crisis in the financial world justifies such intervention.