However, the debt relief provided by the Dutch government during 2009 and 2010 as part of the constitutional reforms caused significant excess liquidity in the banking sector.
Moreover, the effects materialize quite gradually, with over half of the adverse effects on GDP occurring at a horizon of more than a year. In interpreting these estimated effects on GDP, it is important to underscore that the estimates do not take account of any offset due to monetary policy easing – a key consideration that I will discuss shortly.