ECB reports record loss of nearly 8 bn euros for 2024
The European Central Bank (ECB) made a record loss of 7.94 billion euros last year, following a deficit of 1.27 billion euros in 2023. The record loss was the expected result of the bank's aggressive monetary policy in recent years.
The ECB previously purchased large amounts of bonds when inflation was too low. However, as it later raised interest rates to fight inflation due to the war in Ukraine, it now pays more interest on deposits from commercial banks than it earns from its bond holdings.
It was already clear that the ECB's monetary policy would result in losses for several years. It also stressed that it remains financially sound to fulfil its mission.
"The ECB's losses in 2023 and 2024 (...) reflect the role and necessary policy actions of the Eurosystem in fulfilling its primary mandate of maintaining price stability and have no impact on its ability to conduct effective monetary policy," the ECB said.
In 2023, losses were limited to more than 1.27 billion euros, because the ECB used up billions of euros in risk provisions it had set aside in previous years.
Smaller losses expected
If it still makes a loss in subsequent years, it will be smaller than in the past two years because the ECB has already reduced its balance sheet by not replacing maturing bonds. It may also decide to cut interest rates further now that inflation has fallen. In the longer term, the ECB expects to return to profitability.
The National Bank of Belgium also posted a heavy loss of 3.7 billion euros for 2024. The German Bundesbank will publish its results on Tuesday.
PHOTO © Kirill KUDRYAVTSEV / AFP
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