The German central bank, the Deutsche Bundesbank, reported a balance sheet loss of 19.2 billion euros for the 2024 business year, the first such loss since 1979. The loss is attributed to the monetary policy measures of the past years. According to Bundesbank President Joachim Nagel, the additional losses per year are expected to be lower in the future, with the peak of annual burdens likely to have been surpassed.
At the same time, the balance sheet total decreased by around 149 billion euros or 5.9 percent to 2.373 billion euros. Nagel emphasized that the Bundesbank has a “solid balance sheet” with valuation reserves, particularly in gold, being “many times higher” than the current and expected balance sheet losses, which amounted to 267 billion euros at the end of 2024. The Bundesbank plans to present its losses in the coming years and offset them with future profits. “The Bundesbank is entirely capable of taking action” Nagel said.
Vice-President Sabine Mauderer stated that the monetary policy measures of the past years continue to have an impact. “After the complete dissolution of the remaining reserves of 0.7 billion euros, the balance sheet loss amounts to 19.2 billion euros.” The net interest income, the largest component of the profit and loss account, improved slightly by 0.8 billion euros compared to the previous year, but remained in the red at 13.1 billion euros.
The extensive portfolio of securities for monetary policy purposes is linked to an interest rate risk: “The combination of long-term monetary policy securities with low interest rates on the asset side and short-term, higher-yielding deposits of credit institutions on the liability side leads, as in the previous year, to significant burdens” Mauderer said.
For 2025, Mauderer expects the financial burdens to decrease. On the one hand, low-yield bonds in the portfolio will mature and on the other hand, the interest expenses for deposits of credit institutions are expected to continue to decline. The interest rate risk will become smaller, as the monetary policy securities in the portfolio are likely to decrease, Mauderer said.