Belgian Financial Market

Thèmes abordés

Sciences économiques, Belgian financial sector, Belgian financial market, TARGET balance, Belgian household, liabilities and assets, financial corporation, country development, growth of the UE, European Union

Résumé du document

The financial sector has long been seen as a highly useful and productive area of activity. As a result, it has grown extremely dynamically at times. However, the events of recent years have eroded the sector's former prestige. First the US subprime crisis and then the disruption of the euro area, the financial markets came under fire from public criticism. Some people are now wondering whether the financial markets might weigh too heavily on a national economy, to the point of thwarting its growth. In this article, we will focus mainly on Belgium and try to get an idea of its financial sector through several chapters. Thus, it is in the context of a questioned financial sector that we will first see whether the financial sector represents a threat to European countries and more specifically Belgium. Then we will examine the development of Belgium's TARGET balance, which tends to remain negative. In the third chapter, we will see the impact of the debt reduction process on Belgian growth. Finally, we will focus on the threats to financial stability posed by the debt of Belgian households.

Extraits

[...] We can therefore observe through these different graphs that the financial sector can be both a threat and an asset for a country. Indeed, the use of loans provided for the finance sector can both destabilize an economy as well as develop it and accelerate its development. In any case, the financial sector is an indispensable tool for each country and requires precise legislation to limit the problems that can arise. The Belgian financial sector today appears to be in good health and allows for a major development of the country, notably through loans to the general government, non-financial companies and especially households. [...]

[...] Thus, households are borrowing more to build up their real estate assets. This borrowing may also be due to the fact that interest rates in recent years have been historically low and have enabled many households to take action by taking out a loan. As regards non-financial corporations, the trend is towards a reduction in assets, with a fall of from EUR 917 billion to EUR 886 billion[3]. On the other hand, another trend can be observed in the liabilities of non- financial corporations with an increase of from EUR 1,283 billion to EUR 1,336 billion[4]. [...]

[...] At the end of the curve, and particularly from the middle of 2018 onwards, there is a decline in the Target balance, which seems to continue on trend until the end of 2019[12]. A study of this graph enables us to highlight the relationship between Belgium's economic health and its Target balance. Indeed, during periods of economic difficulty in Belgium, its Target balance has fallen sharply, particularly at the end of 2008. Indeed, periods of weak growth and economic difficulties are accompanied by a fall in exports, particularly with the cross-border countries that make up the European Union, without Belgium reducing its import demand. [...]

[...] Belgium, like many other countries, therefore reduced the volume of its exports sharply but without having the same impact on its imports. The result was, as can be seen, a fall of around 50 billion euro in Belgium's TARGET balance. Following this episode of crisis at the beginning of 2009, the Belgian economy and its exports, in particular with the countries of the European Union, are gradually becoming important again, thus reducing the Target balance to - 7.5 billion euros at the beginning of 2011. These data can be interpreted as an indicator of the return of growth in Belgium. [...]

[...] This was followed by another period of decline until early 2008, bringing the TARGET balance to EUR -55 billion. Once again, it could be suggested that exports over this period were lower than imports. But there is another factor to be taken into account, namely Belgium's ratio to the euro. Indeed, it is known that among EU countries there is a great disparity regarding the very value of the euro within a country. Let us take the example of average salaries, which vary from one country to another despite the fact that they have the same currency. [...]