The Netherlands played a crucial role in the development of modern financial markets. The Dutch East India Company is considered the first joint stock company, through how they pooled funds from private investors to spread both the cost and risk associated with long sea voyages. That way, should the voyage fail, each investor would only take a small loss – rather than the Dutch state taking a large loss. In return, each investor received a share of future profits. The success of this model strongly contributed to the Netherlands becoming a leading financial power by the mid-17th century. As of 2023, the Dutch remain one of
The Amsterdam Stock Exchange
The Amsterdam Stock Exchange was founded in 1602 by the Dutch East India Company to handle the company’s printed stocks and bonds. What differentiated the Dutch East India Company from similar contemporaneous ventures (such as the British East India Company) was not the mutualization of risk among multiple investors, but how investors could sell their share in the company to other investors. This created a secondary market for the resale of company securities, leading to the formation of what is considered the world’s first recognizably ‘modern’ stock exchange. To this day the Amsterdam Stock Exchange plays an important role in global markets, with it being one of the main constituents of
Europe’s largest stock exchange, the Euronext. At the end of March 2023, Amsterdam accounted for approximately one quarter of the
Euronext’s total market capitalization - just under half that of Paris, but much higher than the markets in Brussels, Dublin, Lisbon and Oslo. At this time, the
average daily turnover of the Euronext Amsterdam was just under three billion euros.
The Dutch pension fund market
The Dutch pension system is a key factor in the financial markets of the Netherlands, as the Dutch pension system has long been regarded as one of the best in the world. One of the primary reasons for this success is due to the structure. A strong feature of the Dutch pension system is the combination of capital funding for occupational pension plans and pay-as-you-go funding for the state pension (AOW). The AOW is an insurance-linked scheme covering all people working in the Netherlands. The
number of AOW funds has increased year-on-year since 1998. Despite the Netherlands being a relatively small nation having roughly six million
retirement pension members, the Dutch ABP fund is ranked as the fifth
largest pension fund in the world, behind the Federal Retirement Thrift which is headquartered in the United States.
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