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According to Fitch Ratings, the European Central Bank (ECB) and central banks across the European Union are expected to endure "prolonged losses" due to increased borrowing costs. The credit agency projects that the total loss for the Eurosystem will amount to 160 billion euros from 2024 to 2028, before accounting for provisions, reserves, and taxes. This loss is anticipated to decrease as the ECB begins to lower interest rates.
Fitch noted that the central banks of Germany and France are expected to experience the most significant losses. Despite these challenges, the agency does not foresee any changes in credit ratings for these institutions.
The report emphasizes that the Eurosystem must maintain a positive overall net capital and carry forward any losses to future years. Fitch also predicts that the ECB's monetary and interest rate policies are unlikely to be influenced by the financial performance of the banks.
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