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Bundesbank has to tap one billion euros from risk provisions

2023-03-01T11:04:48.265Z


Traditionally, the Minister of Finance can look forward to a transfer - but now it is canceled again: the Bundesbank even had to draw on its reserves in 2022 to avoid a loss.


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Bundesbank headquarters in Frankfurt: No profit for the third time

Photo: Jan Huebner / Blatterspiel / IMAGO

The Bundesbank shows a balanced result in the balance sheet for the year 2022.

However, she had to use a billion euros from her risk provision to avoid a loss.

"In 2022, the Bundesbank had to bear particular financial burdens," said Bundesbank President Joachim Nagel on Wednesday.

In the coming years, "the burdens on the Bundesbank's profit and loss account are likely to increase significantly due to the high securities holdings and the turnaround in interest rates," the Bundesbank said.

Already in the years 2020 and 2021, which were shaped by the corona crisis, the Bundesbank had a zero in the balance sheet and therefore no profit was transferred to the federal budget.

The Bundesbank justified this by putting more money aside for possible risks from the common monetary policy led by the European Central Bank (ECB).

Nagel recently pointed out that the Bundesbank has set aside billions in reserves for such cases in recent years – according to the latest figures, it is 19.2 billion euros.

However, the course of rate hikes in the euro area could mean that there will be years "in which the Bundesbank is very likely to report losses," Nagel said.

The euro currency guardians have bought government and corporate bonds on a large scale in recent years to stimulate the economy and to mitigate the consequences of the corona pandemic.

Many of these papers yield relatively low interest rates, but at the same time the central banks have to pay commercial banks sharply increased interest rates for parked funds.

The ECB, for its part, also had to compensate for a loss of 1.6 billion euros from ongoing business through its risk provisions in 2022, so the bottom line was that there was a so-called black zero.

The result: A profit distribution from the ECB to the national central banks, from which the Bundesbank usually also benefits, was canceled for 2022.

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 department and current Chancellor Olaf Scholz (SPD) was able to look forward to the highest Bundesbank profit since the financial crisis: 5.85 billion euros.

fdi/dpa-AFX

Source: spiegel

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