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2024.02.24
‘€1,266 million – ECB’s loss for the year’ (Annual Accounts of the ECB 2023, Feb 22, 2024). ‘DNB records negative result of €3.5 billion in 2023’ (De Nederlandsche Bank, Feb 23, 2024).
Records negative result ECB Eurosystem is apparently tightly related to the record profit of the European banks. Is this the inevitable price of the effective monetary policy in containing the inflation? Mathematically, is CBs loss = f (banks profit)?
2024.02.20
‘Europe’s Largest Banks Top €100 Billion Profit for First Time – Europe’s largest banks exceeded €100 billion ($108 billion) in profit for the first time last year as the lift from rising interest rates handed most of them record earnings. […] Three-quarters of the lenders in the group achieved the highest profit in their history’ (Bloomberg, Feb 19, 2024).
The record profit of the European banks has been achieved primarily thanks to the interest rates in the form of central bank money. Maintaining price stability (ECB) is the official explanation of the growing interest rates among euro area central banks in 2023. It looks like the fight against inflation implies a high , usually record bank profit.
2024.01.05
‘Waterfall/reverse waterfall approach – The Eurosystem has included a waterfall functionality within the digital euro design, which would allow users to receive payments in digital euro above the holding limit (yet to be defined) by linking their digital euro account to a commercial bank account. A waterfall would be a way of managing an end user’s digital euro holdings via the automatic transfer of digital euro in excess of a holding limit to a linked commercial bank account chosen by the end user’ (ECB, Update on the work of the digital euro scheme’s RDG, 3 Jan 2024).
The first question of the euro area citizens, the potential users of digital euro would probably be: “Why are we drastically limited in using safe and risk-free money, i.e., central bank money for public? Why is the private bank money preferred against the public money?” The story about disintermediation will not emotionally reach the citizens, especially in the time of record bank profits.