In 2024, Germany’s Bundesbank reports €19.2 billion in losses, marking its first deficit since 1979, influenced by the ECB’s past monetary policies.
In a striking turn of events, Germany’s Bundesbank has reported a staggering loss of €19.2 billion for the fiscal year 2024, marking the first instance of negative financial performance since 1979. This unprecedented deficit can be largely attributed to the European Central Bank’s historically accommodative monetary policies, which have now come back to haunt the German central bank.
The implications of these losses are profound, as they effectively nullify any potential allocation of surplus funds to the federal budget—a practice that has been a reliable source of revenue for the government in previous years. According to the data released today, the Bundesbank’s losses for 2024 stand in stark contrast to the €21.6 billion deficit recorded in 2023, which, it should be noted, was comfortably absorbed by the bank’s reserves.
To put this in historical context, the last time the Bundesbank found itself in the red was in 1979, when losses amounted to approximately €2.9 billion—a mere pittance compared to the current figures. The recurring theme of financial shortfalls continues, as this marks the fifth consecutive year in which the allocation of excess profits to the federal budget has been canceled.
Joachim Nagel, the Bundesbank’s president, had already signaled this grim outlook last year, cautioning that the federal government should not anticipate any profit distributions in the near future. “We expect that we will not be able to distribute profits for a long time. The Bundesbank intends to offset its losses with future profits,” he stated, a sentiment that has now become a rather disheartening mantra for policymakers.
In a somewhat ironic twist, while the Bundesbank grapples with significant losses, its gold reserves have seen a remarkable appreciation, increasing in value by nearly 35% in 2024 alone. By year-end, these reserves were valued at an impressive €270.6 billion, further buoyed by the relentless rise in gold prices. One might say that while the Bundesbank’s balance sheets are bleeding red, its gold holdings are gleaming with potential.
As the central bank navigates these turbulent waters, the question remains: how will it reconcile its financial woes with the expectations of a government that has long relied on its annual contributions? The road ahead appears fraught with challenges, yet the Bundesbank’s commitment to restoring its financial health remains steadfast.
