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ECB Sells Dollars, Buys Yen in Portfolio Shift
26 Feb
Summary
- ECB sold some dollar assets and bought Japanese yen early last year.
- This portfolio rebalancing generated a gain of 909 million euros.
- The ECB experienced financial losses for years, but predicts a return to profit.
Early last year, the European Central Bank (ECB) divested a portion of its U.S. dollar assets, reinvesting the proceeds entirely into Japanese yen. This action was characterized by the ECB as a standard portfolio rebalancing to align with target allocations for its foreign reserves. The transaction yielded a gain of 909 million euros.
Despite this specific gain, the ECB has recorded financial losses for several years, largely stemming from its past stimulus programs. As interest rates have climbed, the bank faces significant interest payments on accumulated liquidity. The ECB reported a loss of 1.3 billion euros in 2025, a decrease from the previous year's 7.9 billion euros. It carries forward approximately 10.5 billion euros in losses.
The ECB anticipates a return to profitability either this year or next. However, offsetting these substantial losses and rebuilding provisions is expected to take years, potentially delaying dividend payments until the next decade. Most bonds from the quantitative easing era are held by national central banks, with Germany's Bundesbank facing the largest financial impact among them.
