Good evening everyone and welcome to the 15th edition of the program Amsterdamse Iconen. In this program, we spend an hour in conversation with an iconic Amsterdammer about their life, work, and connection to this beautiful city. We do this through places that the guest has suggested as meaningful to them. My name is Natasje van der Berg, and it is my honor and pleasure to interview our guest tonight. I would like to introduce him to you, especially for those watching on AT5. There are 200 people here in the hall. He is the president of the Dutch central bank, and as an economist and banker, Knot is at the helm of the central bank of the Netherlands. He plays a crucial role in ensuring our financial stability and shaping our monetary policy. His work focuses on very complex economic issues like inflation, financial market stability, and the sustainability of our economy. But Knot does not limit himself to the closed world of banking. He regularly engages in public debate and emphasizes the importance of a stable economy. Ladies and gentlemen, a round of applause for our Amsterdam icon, Klaas Knot.
Mr. Knot, we agreed that I can call you Klaas and use the informal 'you', which is very nice. How did you feel when you were asked to be an Amsterdam icon tonight?
Well, I thought I had now reached the ultimate status. I came to the city in 1995, and it is now indeed the place where I have lived the longest in my life. And yes, this feels like a reward.
Yes. And 30 years of Amsterdam, you really feel like an Amsterdammer?
Yes, I think I can honestly say that I don't know if I will ever do anything abroad, but as long as I live in the Netherlands, my wife and I, and we think exactly the same about this, will probably stay living in Amsterdam. Yes, certainly.
Well, the format of this program is actually always the same. We show a number of places, and we have beautiful photos. So we also asked you to open your private photo album and share some snapshots. We will use those places and photos to discuss your vision and your relationship with the city, and your work and life here. It's actually very simple. And we must of course start at the place where you arrived in 1995. And that was the old Frederiksplein. And here we see it on the map. Yes, at the Frederiksplein. The old building of the Dutch central bank. For many people, not necessarily the most attractive building back then in 1995.
No, that's right. And that always stung a bit, I must honestly say. The Parool newspaper had a top five of the ugliest buildings in Amsterdam for a very long time. And I don't think we were ever number one because there was always some building in the Wibautstraat that was apparently considered even more hideous. But it did sting, because we will undoubtedly talk about that a bit more later.
It wasn't like that in 1967, but anyway. Yes, exactly. But you arrived in '95 in that ugly building, and how did you end up there?
Well, I am an economist by training, and during my economics studies, I became increasingly interested in monetary and financial economics. I also started writing a dissertation on that. And then you automatically come into contact with the Dutch central bank, because my dissertation was about the European monetary system, the impact of government deficits on interest rate movements. And yes, then you have academic conferences where you present papers. Then you are invited by the Dutch central bank to give a seminar and things like that. And when I was nearing the end of my dissertation period, I received a concrete request from the Dutch central bank that they had a number of vacancies and if I would come and talk.
Yes. Because they knew me by then, and because they knew that the work I had done in my dissertation was extremely relevant to the Dutch central bank. I had also gotten to know researchers from the Dutch central bank and, yes, I had a good connection with those people. So, yes.
And did you go to the Dutch central bank because it was a logical career step given your dissertation, or was there also something about Amsterdam being an attractive place to move to?
Well, the latter certainly played a role, but to be completely honest, after my dissertation, I would have preferred to go to the International Monetary Fund in Washington. But my wife was a doctor, and still is, and at that time her studies weren't finished yet, she still had to do her internships and things like that. And it just suited us better at that moment to postpone that for a few years. And then the Dutch central bank came along, so to speak. And yes, that was just a wonderful option because I also knew that what I would do at the Dutch central bank would be relevant if I ever wanted to go to the IMF later. But Amsterdam, yes, I studied and lived in Groningen, but we regularly went to Amsterdam. Because look, we were the first generation to have a student travel card for free public transport. So we regularly went with friends for a night out in Amsterdam and then took the first train back the next morning to be on time for class. And King's Day was always a fixed date to go to Amsterdam with a group of friends. So yes, Amsterdam had it for us. Yes.
Yes. And can you remember what city you encountered then? What did you notice when you really decided to go to Amsterdam to live and work?
Well, I think that in 1995 the city was already quite on the rise again. In the 70s and 80s, Amsterdam was not very popular at all. There was a lot of movement to the suburbs. But you noticed in the 90s that the city was suddenly popular again. And yes, I remember I had only been there a few weeks when Ajax won the Europa Cup 1 in Vienna. And well, we naturally went to the Leidse Plein and so on. We were a bit too late for a police charge. So I think I can still feel the tear gas in my eyes a bit. But everything was happening, and it was a great summer. We lived near the Vondelpark, and there is always something to do there in the summer. We didn't have children at that time. So then you live the carefree life, and Amsterdam is a wonderful place to be.
Yes. And you said we live near the Vondelpark in the Baarsjes.
Yes, that's right. In the Baarsjes.
Where was your first place exactly?
In the Antillenstraat. At a very nice, quiet square where many real Amsterdammers lived. Also older Amsterdammers. It was an incredibly cozy street. So really very nice if you come to Amsterdam for the first time, this really gave you a feeling for Amsterdam.
Yes, also through the entire Vondelpark and then, say, at the Leidse Plein, turn right onto the Weteringschans and then towards the Dutch central bank.
And did you even have a life? I mean, I was just reading your articles and I thought, if you work at the Dutch central bank, you hardly have time for anything other than work and cycling back home.
No, that wasn't the case. No, of course. I did the things you do when you are young and want to live. Yes, I have always worked conscientiously. I must admit that. Studied, worked, and things like that. But as long as we didn't have children, we went out to eat frequently, to the cinema, concerts, we did everything you do at that age.
Yes. And played a lot of sports.
And I see a young economist from '95, but where did he come from? So what was the nest you came from?
Well, I come from Onderdendam. It sounds a bit like Amsterdam, but it is fundamentally different. A village of 200 inhabitants in the north of Groningen. My father was a feed trader. My mother was a teacher at a primary school. And for my father's work, we had to move a few times. So I lived in Roden in Drenthe and in Drachten in Friesland, so the three northern provinces. Yes, a Reformed background, close to agriculture, so to speak, because my mother was a farmer's daughter and my father was in the agricultural supply sector. But for his work, we moved a lot. My father had to do a lot of reorganizations in the company, because that was the time of high unemployment. And yes, the economy was doing very poorly. Late 70s, early 80s.
Yes. So when I grew up as a child, that really shaped my view of economics. That it was a science of big problems, and I didn't understand why those problems couldn't be solved. High unemployment, high inflation, budget deficits that had run wildly out of control. Those were the years of the Lubbers cabinets that eventually had to put things in order. A housing market crisis also came into play, high unemployment, many people on disability benefits. So that really shaped me and motivated me to study economics, to want to do something about it.
And now you talk about it as an economist, with macroeconomic figures. Yes. High unemployment, housing market crisis. But it also affected your family personally, right? Your family was also hit by this?
Yes, that's right. Because my parents were just underwater, as you would say now, during the major housing market crisis of '79-'80. They had bought a second house for the winter, which they could only move into in the spring, and they still had their old house. The realtor said, 'Don't sell it, wait, because prices will only go up.' Yes. And then the market collapsed by almost 40%. And then my parents were left with two houses that were virtually unsellable and two mortgages. So we were never poor, I don't want to make it sound traumatic. But there was little money for things at home. I had two sets of clothes, one I wore and the other was in the washing machine. And I also remember that we didn't go on vacation for a while. So it was really necessary for my parents to get their finances back in order. Eventually they came out of it well, but those things leave an impression on you.
Yes. And now such a career, you said: 'I started studying economics.' We will talk about that a bit longer later, also about your scientific work. But because I saw those problems and I thought they must be solvable. Now we are a few decades further. Is that so? Well, we solved those problems quite well in the Netherlands.
Yes. So if you look back, the policy that was pursued in the Netherlands in the 80s and 90s, where labor participation was structurally increased. So we managed to get more and more people into the labor market. Women started working much more, people worked much longer. People who were disabled, we didn't just leave them at 100% disability, but we looked at whether they could do other work. I think that absolutely led to a successful period of prosperity until well into the 2000s.
And you feel that you were part of that economic science and that economic policy, which had the power or the momentum to apply all those different insights to policy and politics, making that society or economy much stronger or more resilient.
Yes, that's right. I think that the medicine we applied to the Dutch economy back then is now often applied elsewhere in the world. And it starts with getting your affairs in order. Getting public finances in order. Ensuring you don't get excessive swings in house prices, in inflation, and things like that. And I think that policy has brought us a lot of prosperity in the end.
Okay. And then, you said it already, actually when I went to the Dutch central bank in 1995, I wanted to go to the IMF. Now we go back to your Amsterdam period. And indeed, after 3 years at the Dutch central bank, the time had come.
Your dream job in Washington became possible.
Yes, that's right. May 1, 1998. I had worked at the Dutch central bank on the preparations for the European Central Bank. So the ECB. Yes. The ECB also started its operations on May 1, 1998. And then the IMF wanted to set up a separate desk, as it's called in IMF terms, for the eurozone. Because the IMF does country reviews everywhere. So they look at the economy and make some critical remarks. And for the IMF, the arrival of the ECB was also a new development. And then they suddenly had to look not only at the Netherlands, Germany, France, but also at Europe to have an opinion on ECB policy. So they wanted to set up a separate eurozone desk. Well, I applied for that and was accepted. And that also worked out very well for my wife, because she only had to do her specialization in public health. And she managed to get into Johns Hopkins University, which is near Washington. So we could go there together. Had a fantastic period in terms of life. I mean, this was our house, 3719 W Street. Nice porch, fantastic weather. Still no children, so still the carefree life. And you know what's also very nice? When you move to America, you suddenly have no family, but you also have no obligations like birthdays where you are expected to be. So you suddenly have all weekends free. Yes, so you work hard, and my wife maybe had to work even harder than I did, because she was doing her master's at an American university. And that was in Baltimore, so she had to take the train at 6 in the morning. I used to drive her to the station. So they were long days, but in the weekend you were just free and did fun things. And yes, Washington is beautiful, the surroundings are beautiful. It's a very international environment where it's very easy to make contact, because everyone comes from other countries. So everyone has left home and family behind. So it was hard work, certainly. But it was also a fantastic, fun time. And it also had elements of one big vacation.
Yes. And that didn't last very long.
Because you came back to Amsterdam very quickly.
Yes. After just a year and a half. And the reason was actually that the IMF is a fantastic institution.
Explain, because there will be people who specifically graduated in economics and are here for that reason. But there will also be people who think: 'What does the IMF actually do?' Yes, that is the International Monetary Fund. And you could say that everywhere in the world where there is a crisis, the IMF is brought in to apply crisis recipes and get the economy back on track. So for someone with my interest, fantastic.
But just because an organization does fantastic things, that doesn't necessarily mean it's fantastic for you as an individual. And that's what I ran into a bit. In those three years at the Dutch central bank, I had advanced my career quite quickly. I had direct access to Noud Wink, for example, the bank president, whom I advised on certain things. There was little hierarchy at the Dutch central bank, so you could easily access everything. Well, that was completely different at the IMF. The IMF was actually run more like a military organization, with about five layers of hierarchy between me and the managing director, who I don't think I ever saw in that year and a half. And I really had to get used to that. When we went on a country mission, I was the junior clerk. I was allowed to write up the minutes of the meeting. And I didn't think, 'Gosh, I didn't study economics and get a PhD and write a dissertation for this.' And after a year and a half, I got another call from the Dutch central bank. They offered me a position as head of department. And then I thought, if I want the same position at the IMF, I know I'll have to wait at least 12 years. And in those 12 years, I must not have a single argument with my boss, because then it will be 13 or 14 years. So...
Yes. Yes. Yes. Because you became head of the strategy department in the supervision directorate.
Yes, that's right. Then I got into banking supervision. Until then, I had mainly done macroeconomic things. And then I learned a lot about the banking sector. Yes. And international banking, supervision of the banking sector.
Yes, because the Dutch central bank actually does two things. On the one hand, monetary policy. Now, of course, that is mainly done in a European context, so interest rates and stability. But on the other hand, also supervision of ordinary commercial banks.
Yes, supervision of banks and now also of insurers, of pension funds. And that is just enormously important. It is enormously important so that you know that when you put money in the bank, that money is safe. That if you pay a premium for insurance and you have an accident, the insurance can pay out. That your pension is safe. So the Dutch central bank supervises that.
Exactly. Those are the two tasks. Okay. Then we have now had the beginning of your career.
Yes. It's very difficult for me because I'm used to not doing that from my upbringing. Then we will now switch to a second place in Amsterdam that actually symbolizes a great passion of your life, namely science. And that is Roeterseiland. A few kilometers, no, not even. I think it's a kilometer from the Dutch central bank. You can really walk there. It's a 10-minute walk. And there you have been appointed as professor of monetary stability, an honorary professor. But your academic career actually started there. And we use that bridge or the image of Roeterseiland to go through that with you. Because you actually did both your studies and your PhD at the University of Groningen.
Yes. And we also want to know, because we started in '95. You had already told us a bit about taking the train for class. The first train back to Groningen. But what were you like as a student?
Well, serious. Okay. Yes, I was a serious student.
Yes, we have all the snapshots. So yes.
I eventually graduated cum laude. With honors. You really did your best. I really did my best. But well, I was also very enterprising. So at a certain moment, we said as friends, 'Shall we do a hitchhiking competition?' So here I am. We went to Italy. So together with a friend, we went hitchhiking on vacation to Italy. And that went very well. So this was when we had just returned to the Netherlands, that last bit. I was back home in Drachten, this was my dog who then still lived with my parents. So yes, he was of course very happy to see me back. Yes, we just did those kinds of things. Yes, we just felt like it. And at that time, there was also a hitchhiking culture. Nowadays it's much harder, but just on the highways at those gas stations, tapping on the window and asking if you can come along. And most people who take hitchhikers along, they find it great because they have a story to tell. And if you absorb that story and listen, the car just keeps driving. So yes.
And what, and you say: 'I really studied conscientiously, but we also had time for all kinds of fun, crazy things.' Yes. Did you also have, were you part of student life? Were you a member of a student association?
No, I was not a member of a student association. I also don't come from a family with a study tradition. I think I am one of the first in my generation, which many people in my generation had, to really get the chance from our parents to do the full education. My father and mother were also quite smart, but my father, after primary school, the teacher said, 'You should go to the HBS.' And then his father said, 'Yes, that's nonsense because that's all the way in the city. You can also go to the Mulo, because that's in the village.' And when he was 17, his father said to him, 'You're going to work now, because it's enough.' Well, the opportunities my parents had missed motivated them to the core to give us, my sister and my brother, the chance to study. We all graduated. But with that, we didn't have the tradition of a student choir or whatever. By the way, I wouldn't immediately advise my children to do that either. But well, there are plenty of fun things you can do in your studies without that. By the way, you are an honorary member of the student volleyball club.
Yes, that's right. I played volleyball fanatically. More effort than talent, to be honest. But your height helps you, of course.
Certainly. I was also a middle blocker for the enthusiasts. Then you stand in the middle and you just have to jump up very often, very stupidly, and I could do that very well. Yes, so I didn't miss a single jump. Because that's discipline every time. Every time. Yes. But I found the board much more fun. So I was also on the board of the club. And I found coaching fun. So I was also coach of the first women's team. And then I quickly discovered that I had more talent for explaining to others how to play volleyball than I could do it myself. Yes, but that was very fun and also very educational. So coaching, I learned a lot about teamwork from that.
That is... Yes. And as you said, then you went to your studies, cum laude. Not, I mean, you also often say in studies, I was allowed to take a bit longer, fortunately. Yes, I spent 10 years in total at the university. Six years of study and four years of PhD. PhD was fast. Then you were indeed promoted on fiscal policy and interest rates. Fiscal Policy and Interest Rates in the European Union. And you just said that was something I was already very interested in. I found it an important topic. Did you really choose this dissertation topic yourself?
Yes. Yes. So the European monetary system we had then, with exchange rates that were fixed but unfortunately still had to be adjusted regularly. And that always caused crises. The evaluation weekends, arguments between countries, and so on. And yes, because we didn't have the euro yet, everyone had their own currency. And the value of that currency was one of the knobs you could turn to give your economy a boost or to slow it down. Yes. And we had pegged our currency to the German mark, and with that, we imported the stability of Germany. That was also a pillar of the success of Dutch policy in the 80s and 90s. Other countries in Europe tried that too, but couldn't maintain the discipline to then also pursue the policy that went with that fixed exchange rate. So they got pressure from the markets again, had to devalue. Well, those kinds of processes, I found them very interesting, because that was of course economics, it was monetary, but it was also very political. A lot of politics was involved. And yes, that combination of three things has always interested me immensely.
Yes. It is of course true for everyone who has a PhD, then the question: 'When you have finished that, do I continue in science?' Yes. And you consciously didn't do that.
Correct. And that had two reasons. Because I was a reasonable scientist, but I was aware that I didn't have the patience to become a top scientist. Because you have journals A, B, C, D. I was in the category B journals, and if I really wanted to break through as a scientist, I would really have to... you can only do it with A's, and for that you have to be very patient. You sometimes have to work for three years on one article, and I just didn't have the patience for that. And receiving reviews and reviews and all those things where you think, yes, then I have to do a longitudinal study of what does that guy want, you know. So I was just too practical. I also really wanted to do something with what I knew. I didn't want science for the sake of science. I really wanted to apply what I knew. So I was also clearly driven by a motivation to make a social impact with it.
And then you become, perhaps not ironically enough, because the consequence of such a career is that academically they think again: 'Come to us with that practical knowledge.' So you have two professorships. One at the University of Groningen and one at the University of Amsterdam. And what do you do when you are an honorary professor?
Well, look, first of all, in 2005 I became a professor for one day a week in Groningen. And that's nice, because then you can talk from practice. Then you also give lectures.
Yes, you really gave lectures then.
Yes, really just courses and with exams and so on for the Dutch central bank. Very useful because you also lower the threshold for talented students to think, 'Can we do an internship with you?' Yes, you can. No. Yes, it's also a kind of talent scout.
Yes, it absolutely is in the race for talent. Since I became president in 2011, I gave up that professorship, because I said, 'Yes, now I really can't do anything else.' But then first Groningen and later also the UvA came back with the offer to become an honorary professor. That means you have no obligations to each other, but you just try, if possible, to give guest lectures. And I have actually managed to give a number of guest lectures at both the UvA and the RUG every year. And then you can indeed show how the theoretical concepts that you know those students have received are applied in daily life. And being a central bank president is perhaps the highest position in society where we still, every time I sit at the interest rate table in Frankfurt, I think again... really... Phillips curve... not... yes... do you really sit there like that? Oh yes, we... you can just use your high school... for those who haven't had economics in high school, he is now writing formulas from the economics lesson of high school on the... the trade shocks in the world, pandemic, war in Ukraine. Then you ask yourself: negative supply shock? Is it a negative demand shock? And that means, does this mean more inflation, does this mean less inflation? If it means more inflation, that means interest rates must go up. Less inflation means interest rates must go down. So the world constantly has all kinds of shocks, and we in Frankfurt then ask ourselves how do we translate that into the aggregated demand, aggregated supply diagram. And yes, the middle of the cross determines inflation and economic growth. And if one of those two things in the cross moves, then we have to do something. That is actually what we do every week. So you can be president of the Dutch central bank with basic high school economics.
Well, look, there are also some more advanced forms of this cross. [Laughter] You also have concavity and convexity.
Ah, look, now he's showing he's really a professor. Yes, well done.
Yes. First-round effects, second-round effects. So it is a bit more complicated, but it is still, I still apply the knowledge.
Funny. That I would also teach at the university. Nice. And do you still keep up with the science of every day? Because you say: 'I was in that B journal category, not in the A's.' No, you give that up at a certain point. Because science is a constant struggle. But do you still read such a journal sometimes? I have to occasionally, indeed, I have to keep up with the most recent insights that are not generated by myself, but by other professors. And yes, I have to read that occasionally. Yes. Yes. Okay. And I also sit in many discussion clubs and... yes, we see a photo of you from last week or two weeks ago. Room discussion. Well, the UvA, this is just a fun talk show with students.
Yes. And well, I am also in such a Group of Thirty, which is also a very exclusive club. Yes. Where there are also a number of major American economists, Krugman, Summers, Rajan, and so on. And I have a lot of interaction with them and I really still learn a lot from them.
It's a bit like the Supreme Court. You can only join if someone dies.
And then only is there a vacancy. So the chance that you get in is super small. And then you're appointed for life. Right? Yes, that's what it comes down to. So you can Google it. It's very elitist. Cool that you're part of it.
Yes, I am the third Dutch person to be part of it since 1950. Yes, special.
Hey, let's move on because the program is one where we go through Amsterdam. We've actually cheated a bit by using the symbol of the UvA to talk about your scientific career, the beginning of your career. But now we're really going to Amsterdam and we're going to jump to the place where you've lived for a very long time, the Watergraafsmeer. And I also have a Geus Middenmeer here.
Yes. That is a sports, a football club. Yes.
And what, what, what, how is the Watergraafsmeer?
Indeed. The Watergraafsmeer is fantastic.
No, it's a super nice neighborhood. It has a lot of freelancers. So when I took my children to school in the morning, I was the only one in a hurry to get to the office. The others all went to have coffee together first and things like that. [laughter] This is, by the way, King's or Queen's Day. Well, if I look at the age of my children in this photo, then it was probably still Queen's Day.
Queen's Day. But in our street in the Watergraafsmeer. No, it's a super relaxed neighborhood. In terms of amenities, it's great. All sports clubs, schools, and things like that. So with young children, you couldn't wish for anything better. Yes. And you can also live very beautifully. There's an old part of the Watergraafsmeer, Hogeweg, Bredweg, Linnaeusparkweg. Yes, that's all homes from around 1900.
We also live in a home from 1898, because we renovated at a certain point. It's beautiful living. It's also called a middle-class neighborhood.
Is that still the case? Because it's now a sort of prime location.
But there are still a lot of neighborhood shops in my street. And that's what I like about the Watergraafsmeer. You step outside and you immediately have some bustle around you. Yes, I am someone who likes to have that around me. That's why I didn't move to Bussum or Bloemendaal or something, which has sometimes been suggested. But yes, I'd rather stay in Amsterdam.
And that Geus Middenmeer. Did you go there often? Did you have time to...
Yes, definitely. Well, both my children, my son and my daughter, played football there. And yes, as a parent, you want to do something. So I was a linesman for both my children. And then it was a very annoying role. Well, you have to do something. Then you feel a bit like part of it.
Yes, but I heard recently that they might even abolish offside, just because those linesmen always flag incorrectly for their own team.
That would... and that a lot of conflicts arise from it.
