MNI BRIEF: ECB Books 2023 Loss As Higher Rates Hit Home

The European Central Bank recorded a loss of EUR1.266 billion in calendar year 2023, after the release of EUR6.62 billion from the General Risk Provision partially offset an operating loss of EUR7.886 billion, it said on Thursday.

The biggest factor pushing the operating loss higher was higher net interest payments on liabilities, including higher Target2 interest payments on balances held by national central banks, it said. The GRP payout accounted for a full fund distribution. (See MNI INTERVIEW: ECB May Cut Less, Slow Balance Sheet Runoff)

The loss recorded in 2023 followed zero profits in 2022, boosted by a payment of EUR1.6 billion from the GRP. There is no impairment to the central bank's ability to conduct monetary policy, as losses will be held over on the books against future expected profits. Losses are expected for the next few years but should be considered alongside net profits of EUR23.6 billion through December 2022.