Central bank losses and commercial bank profits - unexpected and unfair?
- The Eurosystem and the Deutsche Bundesbank will incur substantial losses in 2023 that are likely to persist for several years. Due to the massive purchases of securities in the last 10 years, especially of government bonds, the banks' excess reserves have risen sharply. The resulting high interest payments to the banks since the turnaround in monetary poli-cy, with little income for the large-scale securities holdings, led to massive criticism. The banks were said to be making "unfair" profits as a result, while the fiscal authorities had to forego the previously customary transfers of central bank profits. Populist demands to limit bank profits by, for example, drastically increasing the minimum reserve ratios in the Eurosystem to reduce excess reserves are creating new severe problems and are neither justified nor helpful. Ultimately, the EU member states have benefited for a very long time from historically low interest rates because of the Eurosystem's extraordinary loose monetary policy and must now bear the flip side consequences of the massive expansion of central bank balance sheets during the necessary period of monetary policy normalisa-tion.
Author: | Thomas Jost, Reimund Mink |
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URL: | https://www.econbiz.de/Record/central-bank-losses-and-commercial-bank-profits-unexpected-and-unfair-jost-thomas/10014476309 |
Parent Title (German): | IMFS Working Paper Series No. 199 |
Document Type: | Working Paper |
Language: | English |
Year of Completion: | 2024 |
Embargo Date: | 2024/03/01 |
Release Date: | 2024/05/06 |
Tag: | Central bank losses, monetary policy, ecb, minimum reserve |
GND Keyword: | Notenbank; Geldpolitik; Geschäftsbank; Deutsche Bundesbank |
Page Number: | 35 |
Urheberrecht: | 1 |
Institutes: | Fakultät Wirtschaft und Recht / Studiengänge / Betriebswirtschaft (Bachelor) |
research focus : | WEITERE |
Reviewed: | ja |
Licence (German): | Keine Lizenz - es gilt das deutsche Urheberrecht |