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Bundesbank’s Risky Bets Backfire: Whopping Losses Wipe Out Safety Net


German central bank losses soar, wiping out risk provisions


The German central bank, the Bundesbank, reported no distributable profit in its 2023 annual report.

This result is a direct consequence of higher interest rates, which had an adverse impact on the bank’s securities holdings.

The bank had to use up all its provisions for general risks and part of its reserves to offset losses incurred.

The ECB (European Central Bank) also disclosed an annual loss of 1.3 billion euros.

The surge in interest rates, which increased the cost of servicing its securities holdings, contributed to the loss.

Several other central banks faced losses due to this same issue.

Despite the financial setbacks, central banks emphasized that their capacity to implement monetary policies and maintain price stability wasn’t affected.

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    ““The Bundesbank can bear the financial burdens, as its assets are significantly in excess of its obligations,” Bundesbank President Joachim Nagel said at a news conference.”

    “Nagel further said Friday that raising interest rates had been the right thing to do to curb high inflation, and that the ECB’s Governing Council will only be able to consider rate cuts when it is convinced inflation is back to target based on data.”


    “The Bundesbank on Friday reported an annual distributable profit of zero, after it released 19.2 billion euros ($20.8 billion) — the entirety of its provisions for general risks — and 2.4 billion euros from its reserves.”

    “The ECB on Thursday posted its first annual loss since 2004, of 1.3 billion euros, even as it also drew on its own risk provisions of 6.6 billion euros, as higher interest rates hit central banks’ securities holdings.”

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