The Bank of France has tapped a special reserve fund to cover losses of 12.44 billion euros in 2023 after the ECB’s rapid rise in interest rates pushed up the cost of servicing deposits.
Many central banks are reporting losses as they raised rates over the past two years, leading to large interest payments on the excess liquidity commercial banks parked with them.
Anticipating such circumstances, the Bank of France has built up rainy day reserves in recent years to cover potential losses, reaching €16.4 billion in 2022 before being used to offset pre-tax losses in 2023.
Villeroy promises that the Bank of France will not need taxpayer help. Future losses could be covered by about 18 billion euros held in another reserve fund and potential asset sales.