Germany's Bundesbank central bank records €8.6 billion loss in 2025

Germany's central bank, the Bundesbank, on Thursday reported an €8.6 billion ($9.9 billion) loss in 2025.

The figure was less than half of the €19 billion loss recorded in the previous year, but remained the second-biggest loss in the Frankfurt-based bank's history.

"While we continue to bear financial burdens, these are easing," said Bundesbank President Joachim Nagel at a press conference. "From today’s perspective, this positive development is likely to continue."

The central bank is set to record a seventh consecutive year of losses in 2025, Nagel said, with accumulated losses carried forward resulting in a €27.8 billion deficit.

But the president said the "Bundesbank's financial burdens are temporary in nature" and explained that profits from future financial years are to be used to reduce losses without external assistance.

The bank can fully discharge its tasks despite the mounting losses, Nagel said. "There is one thing we should not lose sight of here: the Bundesbank still has a sound balance sheet."

The main objective of central banks is not to generate profits, but rather to ensure price stability and a stable currency.

ECB also in the red

However, monetary policy also has consequences for the balance sheets of central banks.

Starting in mid-2022, the European Central Bank (ECB) rapidly raised key interest rates in the eurozone in order to bring high inflation under control.

Higher interest rates on the financial markets led to rising interest expenses on the part of central banks for funds that commercial banks park with them. 

Meanwhile, the central banks' income from long-term securities such as government and corporate bonds was smaller due to comparatively low interest rates.

Inflation is now far from record levels, so the ECB has lowered key interest rates in the eurozone again to 2%. 

Nevertheless, the ECB's balance sheet for 2025 is also in the red with a loss of €1.25 billion.

This means that there will once again be no profit distribution to the national central banks in the eurozone, including the Bundesbank.

In 2024, the ECB posted the highest loss in its history, at more than €7.9 billion. 

The ECB expects to return to profitability in 2026 or 2027. However, it may be years before the national central banks in the eurozone benefit from distributions again.

The bank will carry the approximately €10.5 billion in losses accumulated in recent years on its balance sheet until they can be offset by future profits.