I don't trust the Tagesschau,…

I don't trust the Tagesschau, but this article is still interesting:

"The Bundesbank reports a loss for the first time since 1979

As of: February 25, 2025 12:09 p.m.

The German Bundesbank has made a loss for the first time in decades. The distribution to the federal budget has therefore been cancelled. The background is the ECB's key interest rates.

The German Bundesbank has posted a record loss in 2024 due to the interest rate policy of the European Central Bank (ECB). It was 19.2 billion euros, as the Bundesbank announced in Frankfurt. The financial windfall for the federal budget has thus been cancelled again - as in the four years before. Most recently, a loss was offset by provisions worth billions.

Red figures are also likely for the next few years, although the Bundesbank believes that the losses will be lower. "The peak of the annual burdens has probably been passed," said Bundesbank President Joachim Nagel when presenting the annual financial statements.

Interest rate turnaround eats up reserves

The financial reserves of previous years did not help in 2024: The burden of the ECB's rapid interest rate turnaround almost consumed the buffers. For 2024, the Bundesbank therefore only had 0.7 billion euros in reserves to cushion losses. Although the interest result improved slightly, it was still significantly in the red at around 13.1 billion euros (previous year: 13.9 billion euros).

From the summer of 2022, the ECB had raised interest rates in the euro area sharply in a short space of time in order to get inflation under control. The inflation rate is now back under control and the ECB has lowered key interest rates in the euro area again.

Higher interest rates on the financial markets led to rising interest expenses on the part of central banks such as the Bundesbank, with interest income not keeping pace. At the same time, many long-term securities such as government and corporate bonds, which the euro central banks have been buying on a large scale for years as part of the common monetary policy, yield comparatively low interest rates.

No financial injection for the federal budget

For years, the Federal Ministry of Finance had traditionally planned a Bundesbank profit of 2.5 billion euros in the federal budget. In 2019, the then head of the department, Olaf Scholz (SPD), was still able to celebrate the highest Bundesbank profit since the financial crisis: 5.85 billion euros. The last balance sheet loss was 45 years ago: in 1979, the Bundesbank reported a loss of just over 2.9 billion euros.

The Bundesbank itself must also forego a financial injection, as the usual profit distribution from the ECB has also failed to materialize. The ECB itself reported its second year of losses in a row for 2024 and the highest loss in its more than 25-year history: a good 7.9 billion euros.

Other assets on the Bundesbank's balance sheet, such as gold, performed well: the Bundesbank's total reserves of gold and foreign currencies were valued at a good 267 billion euros at the end of last year - after a good 197 billion euros a year earlier.

[My note: I would mark the following paragraph as propaganda or "hopium"]

Bundesbank President Nagel emphasized that the German central bank has a solid balance sheet. It will carry its losses forward into the next few years and offset them with future profits: "The Bundesbank is fully capable of acting," he explained."

#Bundesbank #ECB #EZB #Zinsen #Verlust