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The European Central Bank opened its books. And imagine what? Due to tightening monetary policy, the monetary institution fell into the red zone last year. The ECB must pay more interest on the debt it owes to national central banks in the eurozone
Why is this important?
The European Central Bank began tightening monetary policy in the summer to combat inflation. Since then, the so-called deposit interest rate – the compensation banks receive for the excess savings capital they hold with central banks (in the eurozone) – has risen from negative 0.5% to 4%.In the news: The European Central Bank posted a loss last year for the first time since 2004.
- The final loss amounted to 1.3 billion euros. In 2023 there was already zero operation.
- Important details: The actual loss was €7.9 billion, but the ECB used €6.6 billion of its allocations for financial risks to keep the loss within limits.
Tightening monetary policy is playing tricks on central banks
to explain: While it is fresh
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