The European Central Bank made a loss for the first time since 2004

For last year, the European Central Bank posted a loss for the first time since 2004 due to interest rate hikes against inflation.

2 mins read

The European Central Bank (ECB) announced its financial results for 2023.

While the bank lost 1.3 billion euros due to interest rate hikes last year, it was noteworthy that the ECB announced a loss for the first time since 2004 due to high interest costs.

In the ECB, which allocated 6.6 billion euros for financial risks, this figure was realized as 7.9 billion euros above the projected figure, while the ECB Council decided to offset the remaining 1.3 billion euros from future profits as “past losses” on the balance sheet.

The ECB did not declare a profit in 2022 after nearly 20 years of making a profit.

The European Central Bank’s statement said that “losses are likely over the next few years, but then a return to sustained profits is envisaged.”

Higher interest rates increased the ECB’s net interest expense. Net interest expense rose from 900 million euros in 2022 to 7.2 billion euros last year.

The total size of the bank’s balance sheet decreased by 24 billion euros to 674 billion euros last year compared to the previous year.

The amount the bank spent on personnel rose from €652 million to €676 million.

While the ECB’s mandate is to keep prices stable, any profit or loss seems to be a by-product. But some analysts believe that a loss could increase political pressure on the ECB and threaten its independence.

The last time the ECB announced a loss of 1.63 billion euros was in 2004 due to exchange rate losses caused by the rapid appreciation of the euro.


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