The European Central Bank (ECB) lost 7.9 billion of euros in 2024, the greatest loss of its history and six times more than in 2023, when it registered red numbers of 1.3 billion, due to interest rates. The agency reported Thursday that losses will be compensated with future benefits.
The monetary entity managed to reduce its losses of 7,886 million to 1.3 billion by applying provisions for risks. “In 2023, the full application of the provision for financial risks, for the amount of 6,620 million euros, reduced the losses of the year to 1,266 million euros, while in 2024 this provision did not allow to cover losses, since its balance was zero “said the ECB.
The losses of 2024, like those of the previous year, are recognized in the ECB balance for compensation with future benefits. Due to the losses, the ECB will not distribute benefits to the national central banks of the euro zone by 2024.
Losses occur after many years of considerable benefits and are the result of monetary policy measures. The ECB expanded its balance through the acquisition of debt, mainly with fixed interest rates and long -term maturities, which gave rise to the increase in liability, whereby the ECB pays interest at a variable type.
Consequently, the increases in official ECB interest rates in 2022 and 2023, to combat high inflation in the euro area, translated into increases in interest expenses in these liabilities. However, the interest income of the debt acquired by the ECB did not increase to the same extent.
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