Short selling on the Dutch stock exchange will be prohibited for the next three months, Dutch Finance Minister Wouter Bos announced early Monday, Sept. 22, on Dutch television.
This is the first time the Dutch government has intervened in the global financial crisis
Short-selling is when investors sell stock they borrowed from its owners, speculating the stock will lose value. If indeed it does, they can repurchase the same stock cheaper, increasing their profits.
Short-selling by investors is believed to have played an important role in the ongoing global credit crisis. The US, Britain and several other countries have also imposed a temporary ban on the practice.
It marks the first time since the global credit crisis began in the summer of 2007 that the Dutch government has actively intervened in Dutch markets.
So far, the Dutch government has always said the credit crisis is a foreign, not a Dutch problem.
Last week, the Dutch stock exchange dropped dramatically, but recovered somewhat on Friday.