World monetary policy: Interest reversal could lead to losses at central banks

09:50  30 november  2022
09:50  30 november  2022 Source:   handelsblatt.com

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The expenses of the ECB increase significantly due to the higher interest rates. These press the central bank's profit. Even losses are possible for the current year.

Die EZB ist nach der Zinswende durch höhere Zinsausgaben an die europäischen Geschäftsbanken belastet. Foto: dpahttp://img-s-msn-com.akamaized.net/tenant/amp/entityid/AA14HyYb.img?h=533&w=799&m=6&q=60&o=f&l=f © provided by Handelsblatt The ECB is charged to the European commercial banks after the turnaround of interest. Photo: Dpadata portal copyright =

The European Central Bank (ECB) warns of losses in the course of its rapid interest reel. Due to the long -term deposit rate, the monetary authorities pay many billion euros in interest rates to the commercial banks, which are parked with excess funds at the national central banks of the eurozone.

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The euro guards would have to combat the record-high inflation rates with interest incidents, which leads to increasing interest expenses due to payments to the money houses, the ECB announced on Tuesday on its website. "In this case, our profit sinks and we could even make losses," she said.

The ECB had launched trillion -heavy bond purchase programs in recent years and helped the commercial banks with super cheap long -term loans. This increased the surplus liquidity of the banks massively. For years, the commercial banks had to pay penalty interest in the euro area if they parked excess funds with the national central banks.

In June, the deposit rate in the currency area was 0.5 percent. In the meantime, however, the ECB has raised the sentence to 1.5 percent within a few months - and ECB President Christine Lagarde has promised further interest rates.

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over time the losses ezbied again, the ECB explained. Because the income of the Euro-Note banks with the bonds and other titles they have kept would increase again. In addition, the red numbers could become smaller if the euro guards reduced assets and decreased by the commercial banks at the national central banks.

Nagel does not conclude losses of the Bundesbank from

in the medium perspective, the return to a positive interest rate environment supports profitability. "You shouldn't forget that central banks are not like ordinary companies: they can lose money and still work efficiently," says the ECB.

Bundesbank President Joachim Nagel recently pointed out that the Bundesbank has formed provisions of around 20 billion euros in the case that interest rates will increase again. Nagel Castle Castle for the Bundesbank. If it came about, this would not be the first time, he said to journalists in Frankfurt a few days ago.

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The German central bank had already written red numbers in the 1970s. However, Nagel does not expect the state to reject capital for the Bundesbank. The German central bank had only submitted balanced balance sheets for the two past Corona years and no longer transferred profits to the federal government.

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