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Germany’s Bundesbank records first annual loss since 1979

Posted on February 27, 2025   |  

Germany’s central bank, the Bundesbank, reported a €19.2 billion ($20.1 billion) loss in 2024, marking its first deficit since 1979 due to rising interest rates.

The bank anticipates further losses in 2025, though they are expected to be smaller than last year.

For years, the German government relied on Bundesbank profits of about €2.5 billion, but economic shifts have changed this trend.

In 2023, the Bundesbank avoided losses by using its financial reserves, but those funds are now nearly depleted.

By early 2024, the bank had only €700 million left in reserves to absorb future shortfalls.

Since 2022, the European Central Bank (ECB) has raised interest rates to combat inflation, increasing financial burdens on central banks.

As inflation declines, the ECB has begun reducing interest rates again.

Higher borrowing costs have impacted central banks, while their earnings have not kept pace.

Many older bonds held by central banks offer low returns, adding to financial losses.

The ECB recorded a €7.9 billion loss in 2024, its largest ever and the second consecutive year of deficits.



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