Bundesbank Records €8.6 Billion Loss: German Central Bank in the Red

The German Federal Bank "Bundesbank" announced its official financial results for 2025, revealing a net loss of 8.6 billion euros. This situation is a direct consequence of the European Central Bank's restrictive monetary policy, which fought inflation through interest rate hikes. As a result, the Bundesbank had to pay billions of euros to commercial financial institutions holding deposits at the central bank, while revenues from previously purchased low-interest bonds remained unchanged. These losses were offset primarily by drawing down reserves accumulated in previous years, meaning that once again the Bundesbank will not transfer any profit to the German federal budget. In contrast to the central bank's problems is the condition of Germany's gold reserves. Thanks to a global bull market in precious metals, the value of German gold has surged sharply, technically strengthening the institution's balance sheet, though it does not directly translate into operational liquidity. Meanwhile, data from the real economy is concerning. According to a Creditreform report, the number of bankruptcies in the German craft sector has reached its highest level since 2014. Companies are struggling with high energy costs, a lack of skilled workers, and weakening domestic demand, which particularly hits small and medium-sized enterprises that form the backbone of the economy. Following the 2008 financial crisis, central banks worldwide pursued quantitative easing policies, buying up government bonds. The interest rate hike cycle that began in 2022 reversed this dynamic, making old bond portfolios unprofitable relative to new financing costs. Capital markets also reacted to the financial reports of key corporations. Pharmaceutical giant Merck KGaA warned of an expected profit decline in 2026, linked to generic drug competition and unfavorable currency fluctuations, including a weakening dollar. Meanwhile, logistics company DHL, despite the general economic slowdown, surprised analysts with positive results in its mail and parcel segment. In the defense sector, mergers and record orders are driving results for companies like Renk, although investors remain cautious about conservative future forecasts. The overall picture is completed by the Swiss market, where the Swiss franc remains exceptionally strong, posing a challenge for exporters. „Es ist noch keine Zeit zum Feiern, da unsere Rentabilitätsgrundlagen unter dem Druck hoher Zinsen bleiben.” (It is not yet time to celebrate, as our profitability fundamentals remain under the pressure of high interest rates.) — President of the Bundesbank, responsible for Germany's monetary policy.