The Deutsche Bundesbank joined the European Central Bank in posting a big loss in 2023, the result of a rising interest bill on excess liquidity generated by years of money printing.

As a result, Frankfurt will again not transfer any profit to the federal government, which is struggling to keep its budget deficit within legal limits. Bundesbank President Joachim Nagel said the situation was likely to last "for a lengthy time," but didn't say precisely when he expects a return to profit.

Nagel said the Bundesbank expects cumulative losses "in mid-double-digit billions," but said last year's loss, a record high of €21.6 billion, will probably be the biggest. In the meantime, all losses will be carried forward on the balance sheet.

Nagel stressed that the Bundesbank's balance sheet was "solid" and said he sees no need to ask the federal government for a capital injection. He pointed to nearly €200 billion in revaluation reserves, created by conservative accounting for its gold stockpile.

The news follows a similar announcement Thursday by the European Central Bank, which posted a loss of €1.3 billion and also pointed to more losses ahead.

The Eurosystem, which includes the ECB and the 20 national central banks that share the euro, has accumulated trillions of euros in bond holdings as part of its quantitative easing program, but has created trillions of euros in the process. Bank have parked most of that back at the ECB in a deposit facility that now costs the ECB 4 percent to service.

The Bundesbank covered an operating loss of €21.6 billion by releasing nearly all of the €19.2 billion of provisions it had put aside over recent years. It also drew down €2.4 billion out of reserves. That allowed it to break even on an accounting level.

The Bundesbank’s net interest result, which includes payments on most bank deposits and the income from its share of the Eurosystem's bond portfolios, was negative €13.9 billion, reflecting the fact that banks in Germany accounted for nearly one-third of all the money in the deposit facility. The Bundesbank's problems are made worse by the fact that its bond portfolio yields less than those of other national central banks, because it consists overwhelmingly of German bonds, which generally yield less than bonds from elsewhere in the eurozone.

Financial markets expect the ECB to cut interest rates by a full percentage point this year, which will reduce the central bank's interest burden. At the same time, the Bundesbank will be reinvesting some of the maturing bonds in its portfolio in new bonds with higher yields.