Bundesbank announces loss for 1st time in 43 years

ANKARA

Germany’s Bundesbank recorded a loss in 2022 for the first time since 1979, owing to policy rate hikes by the European Central Bank.

The profit and loss account for 2022 closed with a loss for the year of €172 million ($183.5 million), according to a report from the bank on Wednesday.

The loss was covered by provisions accumulated over the years.

Speaking at a press conference, Bundesbank President Joachim Nagel said the burdens resulting from the hike in interest rates on the bank’s profit and loss account are likely to rise considerably in the years to come.

“Earnings developments now and in the coming years are ultimately the result of the exceptionally accommodative monetary policy of the past few years. Now, a tight monetary policy is needed in order to restore price stability in a timely manner,” he explained.

Since last July, the ECB has raised key interest rates by 300 basis points and has signaled a hike by a further 50 basis points for March.

Pointing to surging inflation rates across the euro area, Nagel said: “We, therefore, need a monetary policy in which action is decisive and the necessary steps are taken to restore price stability.”

The total assets of Bundesbank slid by €108 billion, or 4%, to €2.9 trillion in 2022, due to the decline in refinancing operations by €184 billion (to €238 billion).

On the liabilities side, general government and foreign central bank deposit holdings dropped significantly, leading to the euro-denominated balances of domestic and foreign depositors to fall by €198 billion to €533 billion.

Liabilities to credit institutions related to monetary policy operations, on the other hand, grew by €62 billion to €1.20 trillion.

• Bundesbank