ECB records first financial statement loss since 2004: €1.3 billion to be offset against future profits

ECB bonds

Banca March: The monetary authority presented total losses of €7.9 billion in 2023, which, offset by the €6.6 billion of accumulated provisions in recent years, have resulted in this loss of €1.3 billion in profits. The reason for these results is due to the rise in interest rates, which has increased the payment to the national central banks. In fact, the net interest expense has risen from €900 million in 2022 to €7.2 billion in 2023. Unlike commercial banks, a central bank has the capacity to operate even when its provisions are exhausted or its own funds are negative. However, incurring such losses could lead to confidence problems. The ECB has stated that it will continue to incur losses in the coming years before returning to sustained profits. It has also indicated that it can operate effectively and maintain price stability irrespective of losses; “it has no impact on its ability to conduct effective monetary policy”.

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