All 2013 activities for Financial History of Amsterdam

Launch of digital museum 'Financieel Erfgoed op de Kaart'
Financieel Erfgoed op de Kaart2013 started out with the launch of our digital museum on Financial History. It is called Financieel Erfgoed op de Kaart and is a website that contains the stories and lokation where financial history happened. The site can be viewed on the desktop, in which case it looks like a rich google-map, or via the mobile. The mobile is sensitive to the location and will show the nearest hot spots of history as well as a responsive mobile menu. The launch was covered in both national and regional media and has a steady flow of visitors ever since.
Boat- and walking tours
We organised several taylor-made walking tours on the financial history of Amsterdam for visiting US Students, Norwegian insurers, financial supervisors, Nyenrode college students, employees of Booking.com and the Dutch Ministry of Economic Affairs. On top of that we introduced a boattour on the financial history of Amsterdam, for two large organisation in the financial sector. 
April: Filosofy night on guilt and debt
In april of 2013, the Filosofy night was dedictaed to the theme of guilt and debt. We presented an overview of history and future of money with the title: “Back to the future”. In addition we joined a radio show conversation with Werner Trio of Radio Klara on the topic of money and value.
The Filosofy Night occured in the former Exchange building: 'de Beurs van Berlage'. This inspired us to dedicate a separate part of our virtual museum on the financial history to this site. Since then, all visitors of the Exchange building can use their mobile phone to have a look at the financial history of that building
We wrote some guest blogs. One was about Leviathan for Felix Meritis, the other was a blog on the hands, swearing an oath, at the Amsterdam Museum site. Apart from that we regularly published in the online-blog of the Dutch Financial Newspaper: het Financieele Dagblad. We presented an unknown story of Amsterdam's city giro for a festive event in June and held a workshop on the future (and past) of money for a large financial institution.
Radioshow: Casa Luna
To end the year, we were asked to join the Dutch radio show Casa Luna to talk about the history of money, alternative payments and the current situation in the banking sector. This was a very inspiring two hours of discussion, with a nice deviation to the role of artists and their capability to point out the faults in the financial system, way before supervisors acted. 

2014: pubquiz and walking tour apps
In 2014 we will continue sharing our passion for financial history with all visitors to Amsterdam. We will develop a pub quiz on financial history and launch an iTours app on the financial history of Amsterdam. It will show pictures from the city archive and allow you to experience the history in your own pace. 

We look forward to seeing you in the new year !


Tapering delayed: another historic moment for the FED?

Yesterday evening, Money 2.0 was on the agenda in the Arminius church in Rotterdam. It was an evening in which I briefly outlined some of the major developments and lessons from monetary history to the audience. This coincided with an announcement of the Federal Reserve Board on their monetary policy, that may prove to become a historic case in point.

Balancing the amount of money against economic activity
I explained that history learns us that the amount of money in a society needs to balance the economic activity. The role of central banks is to monitor both and make serious judgment calls as to whether or not contract or expand the so-called monetary base. Expanding too much may lead to high inflation, and a more restrictive approach can lead to deflation. Finding the right balance is thus the essence of monetary policy.

I sketched that each country has in the past experienced a different learning curve in executing monetary policy. These differences help to explain why the German central bank (and the ECB, in its first years of existence) tend to be restrictive and careful not too expand the money base, while the FED appears to lean towards easing the money supply. As if to prove my point, at that very moment, the FED informed the markets that they were delaying their planned contraction of the monetary base until the economy would be seriously better.

Now, let's see where this might be coming from.

Different lessons lead to different central bank styles
First, we will look at the situation in Germany between the two World Wars. Germany had to pay France a huge amount of money as 'repair' payments for the damage done in the war. A sequence of events in 1922 however makes it clear that the Germans will have a hard time paying back their money. And as a part of the conflict between France and Germany, the Germans start printing money, to finance a strike in the industrial area of the Ruhr. The cumulative effect of the developments - see Kindleberger-  was hyperinflation and even the Dutch still recall this (some of us are still holding worthless million mark notes of those days).

Now, let's have a look at the United States at the end of the 19th century. We can see a depression, deflation and a shortage of money. And there is a serious debate as to the use of gold or silver as a standard to base the currency on. This discussion even filters down to a book, the Wizard of Oz, as Hugh Rockoff explains here. In short, the US experience is that you have to be careful not to have a shortage of money.

As both memories linger on in the collective minds, we can thus see that the German central banking approach is not to ever encounter high inflation again. They tend to be on the careful side and tried their utmost to instill this sense of discpline in the European Central Bank. Meanwhile, the FED is making sure not to ever encounter a shortage of money again, so are expanding their money base more easily.

Delayed tapering: a historic moment ?  
When the FED yesterday announced that they were not yet going to contract the money base, this came as a surprise to the market. Earlier this year, Bernanke had explained that the FED would slowly start contracting the money supply. So he caught the market off guard. And in a few years, we can determine if that was indeed a historic moment. I think it was.

The FED-announcement above all marked the beginning of an unclear policy. So far the FED has been careful to explain and predict its own moves to the market by providing so-called forward guidance. While a bit unconventional, the market has been getting used to this guidance and has also responded to the earlier announcement of more restrictive monetary policy. This response may in turn have led the FED to change its previous opinion on the timing of tapering.

What may happen now is that the market and the FED get entangled in a dance where neither party knows whether to lead or to follow. Both are looking at each other while trying to find out if the economy itself is getting in a better or worse shape, as a result of their dancing. Rather than leading the dance, based on the music, the FED is now adapting to the dance partner as well.

It's this ambiguity of the FED and increased unpredicatbility that may well make yesterdays announcement a historic one.


Morality meets money on Filosophy Night (12th of April) in Amsterdam

Morality and Money. Two concepts that are - whether you like it or not - infinitely intertwined. As we witness European funds and cash being sent to Cyprus, we can also observe that a number of conditions are attached which seek to address concerns as to the 'tax haven shelter' or money laundering nature of its financial sector. In a similar way it is impossible in todays Dutch society to cheerfully announce anything on the topic of bonuses, without ending up in a moralistic debate. But the link between morality and money is far deeper than that.

On the evening of the 12th of April, the Beurs van Berlage in Amsterdam becomes the venue of the so called Philosophy Night. It's an evening organised by the Dutch Philosophy Magazine and has a dense programme of lectures, discussions, interviews that all revolve around the relation between money, philosophy, morality and guilt. Visitors will be able to choose among many sessions to discover the views of philosophers, journalists, bankers, politicians and artists. While most of the programme is in Dutch, the English-spoken part of the programma itself contains a very nice line up with Michael Sandel, Thomas Sedláček, Jules Evans and Donna Dickenson.

Sandel is of course well known for his college sessions on Justice and the moral limits of markets (on which he wrote in: What Money can't buy) and he will be the main guest that opens the evening. Later on, that night, Tomas Sedláček will give a presentation on the main theme in his book: the Economics of Good and Evil. He argues that economic discussions are so intertwined with culture, art, philosophy etc that discussions on economics boil down to questions of good and evil.

Jules Evans, author of the book Filosophy for Life, will be discussing how the Stoic way of thinking may be helpful in liberating ourselves from the chains of commerce and the addiction to money, power and status. And finally Donna Dickenson will be interviewed on the subject of selling body parts for money. What are the practices, how far can this go, should there be a limit?

The fact that these subjects are discussed in the Berlage Exchange Building is quite symbolic by the way. It's designer, Berlage, has chosen to translate his and Albert Verweijs view on the future development of society into the artwork of the building. And that view was that there would be an inevitable further development from an industrial society to a new society in which money and trade no longer exists and man/women live equally and happy ever after. So even the building is engaged in the debate of that night.

To see this, just look up when entering the building, on the 12th of April and you'll see a carving in relief of people grouped together. Below are the verses by the poet Albert Verweij which (translated) say:
`The earth will soon be one: its peoples are groups all,
forming one great union the wide world round.
Ships on the sea advance, trains over land
to varying ends as they go they call'.

See for more info the English Page of Philosophy Magazine here.


History of nationalisation of SNS unfolds quickly .... it's not the endgame that matters

Yesterday evening, the Dutch RTL-news released a number of confidential documents about the supervisory and regulatory discussions on SNS Reaal Group. And while it could be expected that bits and pieces of this process would slowly enter the public domain, I must say this is a very rapid disclosure. It also allows a further reflection on the very recent financial history: the nationalisation of SNS Reaal Group.

The endgame
The details of the latest discussions, just before the nationalisation, are highly fascinating. We see the board of SNS fighting for their bank, clinging onto the hope that:
- the regulator sees that the valuation of the possible losses in property finance should be lowered,
- hence, nationalisation cannot be considered a valid legal option (as any loss would not be sufficient enough to trigger the legal nationalisation bazooka),
- thus: the CVC offer stands a good chance of continuing.

Meanwhile the regulators' view is also quite clear. DNB, the central bank and supervisor, has been very patient and lenient in allowing the search for possible private-public solutions. But at some point they have to draw the line. This point arrives when the SNS-CEO and CFO explain in January to the Minister that it is either the CVC bid or nationalisation. Perhaps they hoped that this would force a momentum for the CVC-rescue.

Instead, this statement may have finally convinced the Ministry of Finance and DNB that a nationalisation was indeed the only option. The proposed deal of CVC did indeed, as our Minister of Finance explained during a press conference, contain too many goodies for CVC with too little compensation for the State. Furthermore, as I was expecting, CVC was asking for something impossible: the committment of the supervisor not to intervene in the coming years. In sum, the private-public rescue action was nowhere near to a solution that suited both the business and the regulatory constraints.

2011- and later... working towards a solution
The RTL-papers also clarify the run-up to the nationalisation. It's interesting to note that at the end of 2010, the supervisor observes that SNS Reaal Group is undercapitalized and unable to really wheather a further storm in the market or the media. From that moment on, all work is geared towards eliminating the risks in the portfolio and getting SNS Reaal to take all necessary action, including the sale of parts of the company.

I think 2011 also marks the start of a period in which both DNB as a supervisor and the Ministry of Finance become aware of the fact that some form of rescue may be necessary. But it's a different rescue this time. There are obstacles that stand in the way of the usual solution: inviting the biggest Dutch players and working out a way to safeguard continuity. This did still work for the smaller Friesland Bank (absorbed by Rabobank), but is impossible for the more complex SNS Reaal Group.

As FT Alphaville puts it, the SNS demise was an accident waiting to happen. While bank board and supervisor were doing their utmost to save the bank, the losses and problems were just too much. In this respect it should be noted that in these years, the politicians did a good job at confusing and complicating the financial markets with their prolongued sovereign crisis. In combination with all the post-financial crisis measures, this meant that there were no buyers or parties in the market that would be interested in helping solve the SNS problem. At the same time, SNS could benefit from the crisis by using ECB-funding to buy time.

Essentially we can see that the years 2011 until the beginning of 2013 all eyes were focused on getting to save SNS Reaal. And in that time the so-called Intervention-law (allowing nationalisation) was also being developed and ratified. It think that this law and the principles of trying to seek a private solution within its regulatory framework, focused the minds of all persons involved, whether bankers, supervisors or civil servants.

But is it the endgame that matters?
We should note that the true accident happened in 2006 when SNS did not limit its risks when taking over Bouwfonds Propery Finance. In doing so they exposed themselves to a continued drain on their profits and capital, which they were unable to neutralize. When the financial crisis further evolved and lead to a further worldwide change in risk and capital attitudes, the situation had essentially become unsustainable. SNS Reaal had become, in the Netherlands, the elephant in the room, that no one dared to discuss.

This leaves us with an interesting but highly hypothetical scenario. What would have happened if, at the end of 2010, the supervisor and Ministry of Finance would have stepped back a bit further. Suppose that they would have outlined that any resolution for SNS Reaal Group would have to occur in a stressed market. Which is a market in which it is hard to expect to get a good deal. And thus, they could have argued, while the financial stability of the market was not (yet) at stake, nationalisation of SNS Reaal or ringfencing of some of its activities were essentially the only two options in 2010.

My guess is that the public might have resented such an approach as being too premature. Yet, if we truly wish proactive supervision, we must also be willing to allow unexpected and early interventions, rather than just the end-of-the-road nationalisations. And it is in this respect that the current Intervention law doesn't help. It details a roadmap for the last part of the journey of a bank in despair, and thus focuses all energy of the involved players on remaining within that roadmap. As such it blocks and diverges the attention from other solutions that might have been possible and useful on the earlier bits of the road.


Financieel Erfgoed op de Kaart: opening digitaal museum over financiële geschiedenis

Vandaag lanceer ik officieel de site: 'Financieel Erfgoed op de Kaart'. Dat is een online 'virtueel' museum, dat de financiële geschiedenis van Nederland ontsluit op basis van de lokatie (Google Maps). De verhalen uit die geschiedenis zijn te vinden door in te zoomen en te klikken op de i, of door het menu rechts onder Amsterdam verder uit te vouwen en een informatiepunt te selecteren.

Ik heb Financieel Erfgoed op de Kaart gelanceerd om de verborgen verhalen uit de Nederlandse financiële geschiedenis op één plaats te ontsluiten en bewaren. Overal in het straatbeeld zijn namelijk nog sporen te zien van de financiële geschiedenis. Maar de verhalen erachter zijn niet altijd meer bekend, terwijl ze toch nog steeds boeiend en relevant zijn.
Foto: P. Louw, 2005
Neem bijvoorbeeld de Munt in Amsterdam. Dit gebouw is slechts één jaar in gebruik geweest voor het slaan van munten. Het gebouw brengt ons terug naar 1672 waarin Nederland onder de voet werd gelopen door Frankrijk, Engeland en twee Duitse prinsen.

 In feite bleek toen dat Nederland, als klein land, voor haar zelfstandige voortbestaan altijd erg afhankelijk is van de omringende landen en er het beste aan doet zich te voegen naar de dynamiek van de grote buurlanden in Europa: een inzicht dat ook nu nog steeds relevant is.

Op www.financieelerfgoedopdekaart.nl kan een bezoeker vanachter de PC thuis een 'wandeling' door het financieel erfgoed maken. En wie zélf op pad in Amsterdam is en de site op de smartphone opent, ziet de informatie over de meest nabije historische plaatsen getoond in een menu. Ook kan de augmented-reality toepassing Layar worden gebruikt. Op dat moment fungeert de stad feitelijk als openluchtmuseum.

In dit digitale musuem staat het verhaal van de financiele geschiedenis centraal. Per lokatie komt een deel van die geschiedenis aan bod: een persoon, een gebeurtenis, een gebouw of een organisatie. Op elke plek wordt informatie en audiovisueel materiaal gebundeld die normaal gesproken op allerlei afzonderlijke plaatsen te vinden is: de archieven van financiële instellingen, foto's uit de beeldbank, kennis uit wetenschappelijke artikelen, de collecties van musea, gedenkboeken, wikipedia enzovoorts.

Het platform richt zich nu nog op Amsterdam en is tot stand gekomen in samenwerking met het stadsarchief Amsterdam, het Amsterdam Museum en het Joods Historisch Museum. Het zal door samenwerking met universteiten, lokale museau en historische kringen in de komende jaren uitbreiden naar andere plaatsen in Nederland.

Daarnaast staat ook een Engelstalige versie op stapel, vooral gericht op de buitenlandse bezoekers/bewoners van de stad Amsterdam. In het Comité van aanbeveling voor dit project hebben zitting: K. Knot (President van de De Nederlandsche Bank), E. van der Laan (burgemeester van Amsterdam) en J. Jonker (Hoogleraar Bedrijfsgeschiedenis Nederlands Economisch Historisch Archief).