The European Central records the largest loss in its history

The European Central Bank announced at its headquarters in the German city of Frankfurt on Thursday that it recorded the largest annual loss in its history for the year 2024, for the second year in a row. His net losses last year amounted to more than 7.9 billion euros.

The bank pointed out that this loss is considered the largest over the course of more than 25 years, which reflects the great economic challenges faced by the bank due to the monetary policy decisions taken in recent years.

As a result of these losses, the European Central Bank will not be able to distribute the usual profits to the member states of the euro area. In 2023, the bank was able to reduce its losses to 1.3 billion euros thanks to the use of backups, but these large losses this year indicate the bank’s financial performance was affected.

The impact of these losses will also leak to the national central banks in the euro area, and the German Central Bank had indicated that it expected the distribution of profits to the German government for a long time.

Despite the great losses, the European Central Bank confirmed that it is still able to fulfill its basic mission of ensuring price stability in the euro area. The bank added that if the losses continue in the coming years, it is possible that it will be less than it was in 2023 and 2024, and it is expected to return to the profits after that.

The losses are due to several factors, most notably the high interest rates raised by the bank since the summer of 2022 to curb high inflation. Although inflation has decreased significantly since then, raising interest rates has increased the interest expenses paid by central banks, while the benefits have not been made at the same pace.

The securities kept by the bank lost their accounting value, which led to an increase in adjustments to the accounting values ​​of financial assets, which amounted to 269 million euros, compared to 38 million euros in the previous year.

The bank indicated that these losses are temporary and that it will remain committed to implementing the monetary policy that aims to stabilize prices, which is considered one of the main goals of the European Central Bank. (Russia today)