Home » ECB: 2023 budget in the red after 20 years of profits with losses of 1.26 billion

ECB: 2023 budget in the red after 20 years of profits with losses of 1.26 billion

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ECB: 2023 budget in the red after 20 years of profits with losses of 1.26 billion

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The European Central Bank closed the 2023 balance sheet with a loss of 1.266 billion euros, after 20 years of profits, to pursue its mandate on price stability. The budget in the red is the result of the struggle of Bce against high inflation and is the consequence of the tightening of monetary policy.

No profits relating to 2023 will therefore be distributed to the 20 central banks of theEurosystem.

The ECB’s last budget in the red dates back to 2004, when the euro was strong: in 2004 the loss amounted to 1.6 billion. The ECB closed the 2022 budget in balance, with an economic result of zero. The losses, equal to 1.627 billion and mainly attributable to interest expense on the Target2 net balance, were covered entirely by the provision fund in 2022.

The losses in the 2023 budget are temporary in nature: the ECB expects a few more years balance sheets in the red (but less than five years), with losses that should gradually decrease with the reduction in the size of the balance sheet and the securities portfolio and with the interest rate cut which reduces the interest paid by the ECB on its Target2 liabilities.

The temporary nature of these losses, therefore, allowed the Governing Council to take the decision to keep the 2023 loss on the balance sheet, covering it against future profits.

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