Treasury banking

The Dutch State Treasury Agency is not just the sovereign debt management office in the Netherlands, but also the organisation responsible for what is called the organisational set-up of treasury banking (in Dutch: “schatkistbankieren”). In this context, the DSTA can be seen as the central treasury for all Ministries, social security funds and a large number of (semi) public organisations.

Most of the public organisations participating in treasury banking have a decentralised public responsibility for the execution of tasks assigned to them by law or otherwise. Some organisations that are part of the public sector, mainly schools and universities, choose to participate in treasury banking on a voluntary basis. Local and regional public authorities can also choose to participate voluntary in the system of treasury banking, but are not allowed to borrow from the Ministry of Finance. Others are legally obliged to participate, for example CBS (National Statistics) and CPB (National Bureau for Economic Policy Analysis).

All entities participating in treasury banking are independent in the execution of their (legal) responsibilities, with the exception of their treasury functions. They are obliged to put all of their financial assets with the Ministry of Finance, on a current account and/or in one or more deposits. Most organisations also have the possibility to apply for a current account credit facility and to borrow from the Ministry of Finance for their investments. Bundling of cash flows prevents simultaneous borrowing and lending within the central government. All organisations still have their payment accounts at commercial banks, but only for the execution of their daily transactions.

All incoming or outgoing transactions of the participants take place using this payments account. At the end of each day, a credit balance on the payments account will be swept away to the current account held at the DSTA; if the payments account shows a debit balance at the end of the day, the DSTA will pay off the debit balance by transferring money from the client's current account at the DSTA to the payments account. This daily regulation of the balance is called zero-balancing. As a result, no money is held at commercial banks overnight.

Participants can also put money on deposits for any period between two days and ten years. When needed, deposits can be redeemed at their market value before the expiration date. Also, most participants are allowed to borrow from the Ministry of Finance. Loans are provided for only after the Ministry that is responsible for the organisation concerned provides a guarantee for repayment of the loan and interest charges. Schools and universities can borrow based on a mortgage or a municipal guarantee.

As of 2009, public organisations that are allowed to participate on a voluntary basis may choose to put only a part of their financial assets on a deposit with the Ministry of Finance. This is called 'Partial treasury banking'; the minimum amount of deposits is 5 mln euros. Just like regular deposits, these can be redeemed at their market value before their expiration if necessary. Effectively, partial treasury banking is like purchasing government securities, the only difference being that no fees have to be paid.

Detailed information on treasury banking is only available in Dutch (see the link below). The table below gives an overview of the interest rates applicable to the different treasury banking facilities.