According to Reuters on February 23, the central banks of Germany and the Netherlands announced losses in 2023 on the 23rd, and at the same time, there will be more financial difficulties in the future, which indicates that they are unlikely to pay dividends to the treasury in the next few years.
The report said that the ECB and its branches in some of the largest countries have incurred huge losses, depleting reserves and large amounts of equity capital as interest rates sharply force them to pay billions of euros in interest to commercial banks.
The Bundesbank said it lost 21.6 billion euros last year, almost depleting all of its reserves, while the Dutch central bank lost 3.5 billion euros, both broadly in line with expectations.
Joachim Nagel, president of the Deutsche Bundesbank, said: "The financial burden could last for years. We ......The current year is expected to be considerable. ”
The Bundesbank said the losses in 2023 had almost exhausted all of its reserves, with 2.4 billion euros of that loss going to be covered by reserves.
Nagel added: "We don't expect to be able to pay any profits for a longer period of time. ”
At the same time, the Dutch central bank said that its buffer should be large enough to cover future losses, and that a recapitalization by ** is not currently being considered.
"We will resume the distribution of dividends to the Netherlands** once we have fully restored the buffer by retaining profits," the Dutch central bank said. ”
Most of the losses were the result of the ECB's decade-long stimulus program in the pre-pandemic era of low inflation, the report said.
The ECB printed trillions of euros worth of cash to stimulate economic growth, and much of that excess liquidity – 35 trillion euros – still moving around the financial system.
When money is deposited back into the ECB, the ECB now has to pay a deposit rate of 4%, while the yields on the assets it buys (mainly bonds) are much lower.
Losses do not weaken the central bank's ability to operate, unlike commercial banks, and it can continue to operate in negative equity. But the losses did limit the ability to pay dividends to the budget (which used to be a stable income) and criticized the central bank.
Morgan Stanley estimates that the European Central Bank and central banks – often referred to as the eurosystem – will see losses increase further this year and fall in 2025.
"We estimate that the eurosystem will face losses of €56.6 billion, €62.2 billion and €12.3 billion in 2023, 2024 and 2025, respectively," the company said. ”
*: Refer to the news network.