Saturday, 8 November 2025 - 13:55

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The Netherlands’ central bank, De Nederlandsche Bank (DNB), issued a strong warning to Dutch policymakers about agreeing to European debt instruments, saying they could significantly increase Europe’s debt load.

In an interview with De Telegraaf, DNB President Olaf Sleijpen criticized eurobonds—state-backed loans issued by the European Union—as a potential source of escalating debt. “The risk of eurobonds is that they ultimately only lead to higher debts,” Sleijpen said.

The Dutch political landscape is divided on the issue. Parties including D66 and GL/PvdA have long supported eurobonds, while CDA recently signaled openness for specific investments. VVD and JA21 remain firmly opposed.

Sleijpen, who took over from Klaas Knot on July 1, 2025, adopts a more cautious stance than his predecessor, who saw eurobonds as a useful tool for financing large European projects. “Is it a change from Klaas Knot? You can draw that conclusion yourself,” Sleijpen said.

He emphasized that any approval of eurobonds should come with strict conditions. “If eurobonds are issued, my advice is that countries not meeting budget rules under the Stability and Growth Pact must make extra efforts to reduce their national debt,” he told the newspaper, noting that without such measures, Europe’s overall debt could rise unchecked.

DNB plans to publish new figures on the Netherlands’ state debt, including its share of European debt. According to the central bank, European debt has increased from 538 billion euros in 2021 to 875 billion euros in 2024, largely due to loans issued by Brussels to member states. The Netherlands’ current share is calculated at 17.6 billion euros, which Sleijpen said could grow if eurobonds are widely issued.

Sleijpen warned that Europe’s current average debt-to-GDP ratio of around 90 percent is already high, with France at 113 percent, Italy 135 percent, Greece 154 percent, and Spain 102 percent. The Netherlands’ ratio remains under 44 percent. “When you know all this, you should not let debt increase. That is the biggest risk of eurobonds,” Sleijpen said.

He stressed that European collaboration on investments, innovation, energy, and defense does not automatically require joint financing. “Europe can be built with or without eurobonds. The core question is what role the EU should play,” he said.

While eurobonds could lower collective borrowing costs for the EU, Sleijpen noted that they are more expensive for the Netherlands than issuing its own debt. VVD Minister Eelco Heinen previously called eurobonds “the biggest gift you could give to Marine Le Pen,” as they allow countries like France to borrow more cheaply through Brussels.

Sleijpen argued that creating a truly unified European capital market does not require eurobonds. “Investors mainly want harmonization of national rules and laws, and a stronger international role for the euro depends on internal market reforms, not eurobonds,” he said.