In a traditional industry, an expansion in supply puts immediate downward pressure on price, squeezing profit margins, reducing the incentives to invest and  4  BIS Review 13/2001  encouraging exit from the industry. In the financial sector, the price that falls when the supply of credit increases is the interest rate.
This so-termed real effective exchange rate of our currency is now 8% above the average for the period 1980-2000. Moreover, there is little reason to complain about the euro exchange rate as its consequences are not that overwhelming. To the extent that the Netherlands is a small, open economy, the vast majority of its trade is confined to countries that also calculate in euro.