THE CLOGS ON THE DUTCH MARKET
Why hasn't the Dutch guilder market taken off? The guilder is strong, closely linked to the Deutschemark, yet for much of 1986 yielding a more attractive return. Besides, the guilder market has the advantage that major movements tend to lag behind those of the Deutschemark, making it more predictable. Effective turnover is Dfl100 billion ($43 billion) a year, about a quarter the size of the Deutschemark market.
On January 1 1986, the guilder capital market had its own Big Bang--or Big Bloom as it might be more suitably called in Holland. Like other European centres which found their financial business slipping away to London, Amsterdam was to open up the guilder market to foreign competition and thereby encourage more efficiency and innovation.
For the first time, foreign banks were allowed to lead-manage guilder bond and note issues. Restrictions on new instruments were also lifted, introducing bullet issues, commercial paper and FRNs. The minimum length of bearer bond issues, which was five and a half years, has been abolished, and lead managers no longer have to queue to file issues with the central bank. They need only give three days' notice.