Bundesbank with positive finance statement in 2015, reporting net profit increase of 7.8% to 3.2 billion EUR. The very low interest rates had negative impact on the finance statement of Bundesbank during the last year. The net income of the bank from interest fell from 3.1 to 2.3 billion EUR. In addition, provisions for several billion EUR earmarked, as result of the single monetary policy, conducted by the European Central Bank (ECB) also burden the balance of the Bundesbank.
Bundesbank is usually critical to the purchase of government bonds and it must be carried out within the framework of the common monetary policy of the Eurozone. However, the securities are also a source of income, because income from interest is deductible proportion of the German Central Bank. Now Bundesbank manages to release of provisions for such transactions as soon as the Greek and Italian bonds, which were acquired during the peak of the debt crisis, are now expiring maturities. Nevertheless, the Bundesbank reduced provisions set aside – from 14.4 to 13.6 billion EUR.
Through its quantitative easing program, ECB injected into economy 60 billion EUR per month through purchase of government bonds and other securities. the proponents of this policy are hoping thereby to encourage economic growth and to be struggled for low inflation in Eurozone, which is seen as a risk albeit dramatic.
“The profits will flow into the federal budget”, said the President of Bundesbank, Jens Weidmann. “We should not ignore the long-term risks and correct them by already too lax policy. The bankers should stop to think how to reduce interest rates, but how to get back to normal conditions”, added he.
Due to the higher profits of Bundesbank, now German Finance Minister Wolfgang Schauble will have more resources to deal with the refugee crisis.