Bank of France losses mount due to ECB monetary policy implications

The Bank of France officials reported that its losses widened in 2024 due to rapid changes in the European Central Bank's (ECB) monetary policy.

The French regulator is facing simultaneous need to service high-interest deposits, created recently, and get less income from bonds purchased when borrowing costs were low.

Last year, the Bank of France's loss widened to 17.9 billion euros ($19.5 billion). That's a 5.5 billion-euro increase compared to 2023, when the bank made a one-time gain of 4 billion euros on the sale of dollar-denominated assets.

The Bank of France will compensate for part of the deficit by using 10.1 billion euros from reserve funds. The rest of the losses will be carried forward.

As Bloomberg notes, the central bank's zero profit is also a blow to the French government, which has received billions of euros in corporate tax and dividends over recent years.

In the coming years, the agency believes, the Bank of France's profits should gradually rise as the volume of low-fixed-rate bonds in its portfolio shrinks.