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Irish Independent
3 days ago
- Business
- Irish Independent
Central Bank lost €795m last year, due to interest rate mismatch
The loss was a result of the monetary policy in the eurozone, with central banks buying government bonds during the Covid-19 pandemic at a very low, fixed rate of interest or yield. The ECB raised interest rates by a total of 4.5pc from July 2022 onwards, in a bid to reduce the inflation sparked by Russia's invasion of Ukraine. This meant the low-yielding bonds on the Central Bank's balance sheet were being funded by paying interest at the ECB's new higher rate. 'This balance sheet structure and interest rate environment is forecast to reduce the Central Bank's income over a number of years and to result in losses in 2025, and potentially beyond,' according to the regulator's annual report, published today. 'While these losses are expected to be covered by the Central Bank's financial buffers, their full extent is uncertain and will depend on many factors, in particular the monetary policy set by the ECB's governing council to ensure price stability.' In a blog post published alongside the report, governor Gabriel Makhlouf pointed out that a number of other central banks around the world also recorded losses last year, and said the financial position of the Irish central bank 'remains robust' despite the losses. He pointed out that the Central Bank's role is not to make profits, but to maintain monetary and financial stability. Any surplus income it does generate is transferred to the Exchequer. The bank has a provision for financial risks to cover this interest-rate mismatch on its balance sheet. Some €795.4m of this was used last year, compared to €132.1m in 2023. The Central Bank built up this buffer when it generated substantial profits about a decade ago, driven by gains from selling assets bought in 2013 as part of the liquidation of the Irish Bank Resolution Corporation, the former Anglo Irish Bank. These were all sold by the end of 2023. 'Mindful that both the inflation and interest-rate environments could change markedly over time, realising interest-rate mismatch risk, the Central Bank retained the maximum allowable 20pc of its profits during this period, up until 2022,' the annual report points out. At the end of last year, after using some of the provision to cover the loss, the Central Bank's financial buffers stood at €8.3bn, including capital and reserves of €6.2m and a general risk provision of just over €2bn. Staff expenses increased at the Central Bank last year, following the implementation of a public sector pay agreement. The pay bill came to just over €248m, up from €223m in 2023. The report shows that the number of staff earning between €210,000 and €240,000 a year increased from five to 11, while the number earning in excess of €240,000 per annum went from four to six. The report also shows that the value of gold held by the Central Bank increased to €970m, up from €722m. 'Gold and gold receivables consist of coin stocks held in the Central Bank, together with gold bars held at the Bank of England and Banque de France,' the report says. 'The increase in the balance at year-end 2024 is due to an increase in the market value of gold holdings from the year-end 2023 to 2024.'
RTÉ News
3 days ago
- Business
- RTÉ News
Losses at the Central Bank last year increased six fold to €795m
Losses at the Central Bank last year increased six fold to €795m, according to the 2024 Central Bank's annual report which shows that the losses of €795m follow losses of €132m for 2023. The losses of the past two years followed an era of super profits at the Central Bank where it had generated more than €23.5bn of profits in the 15 years to 2022 in the wake of the financial crisis. In a blogpost accompanying the publication of the annual report, Central Bank Governor, Gabriel Makhlouf said: "Our financial position remains robust, despite the losses that we incurred as a result of the necessary monetary policy actions to achieve price stability. "Prior to the use of any provisions, the Central Bank recorded a loss, like a number of other central banks across the world, of €795.4m in 2024," Mr Makhlouf said. "Similar to last year, this result was due to the exposures arising from the use of the Central Bank's balance sheet as a tool for monetary policy - reflecting our mandate to safeguard price stability." Mr Makhlouf said that the Central Bank's role is not to make profits:"Our mission is to serve the public interest by maintaining monetary and financial stability, while ensuring that the financial system operates in the best interests of consumers and the wider economy." "We find ourselves facing into a period of both challenge and opportunity for the Irish economy, against an uncertain international backdrop," he said. "The global geopolitical landscape faces significant strain and complexity, driven by competing interests, shifting alliances with different values and increasingly independent economic blocs." The report states that going forward, the Central Bank's balance sheet structure and interest rate environment is forecast to reduce the Central Bank's income over a number of years and to result in losses in 2025, and potentially beyond. The report states that "while these losses are expected to be covered by the Central Bank's financial buffers, their full extent is uncertain and will depend on many factors, in particular the monetary policy set by the ECB's Governing Council to ensure price stability. The annual report shows that with the rising price of gold, the value of the Central Bank's gold increased from €722m to €970.76m last year. The report shows that Mr Makhlouf's salary last year increased from €316,794 to €331,369 arising from salary increases across the public sector. Mr Makhlouf is also in receipt of a UK public service pension. The annual report shows that six staff received pay in excess of €240,000 last year with a further 11 receiving pay between €210,000 and €240,000. The amount paid out in professional fees last year increased from €15.05m to €21.65m. The spend on legal fees increased from €1.85m to €2.23m and a note states that the costs relate to 26 separate legal cases including €44,000 for settlements in three cases and €400,000 awarded against the Central Bank. The Central Bank's insurance company paid €70,000 relating to legal costs and settlements. Staff expenses, including salaries and allowances of €198m, increased from €221.23m to €246.28m. Numbers employed increased from 2,234 to 2,263 at the end of last year. Staff hospitality last year increased from €250,000 to €279,000.
Irish Examiner
3 days ago
- Business
- Irish Examiner
Central Bank recorded loss of €795m last year
The Central Bank of Ireland made a loss of €795.4m last year as a consequence of using its balance sheet as a tool for monetary policy. Publishing its annual report, the CBI said the utilisation of its general risk provision brought the result to a nil profit for the year. Central Bank governor Gabriel Makhlouf said the bank's financial position remained robust, despite the losses. "These losses reflect the use of our balance sheet as a policy tool, and — over a number of years — the bank has built up substantial financial buffers in anticipation of such an eventuality," he said. He said the interest rate mismatch risk, which caused the loss, was anticipated and projected, and the Central Bank took a number of actions in recent years to mitigate the impact. As part of its assessment of the risk, a provision of €3bn was built up to cover anticipated losses. The bank's wide-ranging report covers various actions taken in 2024. "Over the course of the year, we put in place a new integrated approach to regulation and supervision, which involved significant internal reorganisation. "This, among other things, will enable us to better respond to the risk environment of the sectors we supervise and the consumers we work to protect," Mr Makhlouf said. Enforcement actions last year included a €1.2m fine for Goodbody Stockbrokers for failing to put in place an effective trade surveillance framework to monitor, detect and report suspicious orders and transactions. Waystone Fund Management was fined €393,512 for eight breaches, including failings in relation to due diligence, conflicts of interest, delegate oversight, risk management, valuation procedures and treating investors fairly. The Central Bank reprimanded and fined BlueSnap Payment Services Ireland Limited (BlueSnap) €324,240 for three breaches of the European Union (Payment Services) Regulations 2018, for failing to comply with its safeguarding obligations and failing to inform the Central Bank promptly of changes to the accuracy of information given at authorisation. Three Central Bank inquiries continued in 2024, including one related to former PTSB chief executive David Guinane, who in January was found to have participated in a failure by the bank in 2009 to act in the best interests of certain tracker mortgage customers, breaching consumer protection rules. Other actions by the Central Bank included issuing currency. Last year, the Central Bank issued 166 million banknotes, valued at €5.3bn, representing a 2% decrease on the 169 million banknotes issued in 2023. The Central Bank, acting as agent for the minister for finance, issued 63 million coins, value at €33m. Read More Irish household wealth reaches a new record of €1,247bn
Business Post
3 days ago
- Business
- Business Post
Asda targets further price cuts as UK grocer takes aim at rivals
Gabriel Makhlouf, the governor of the Central Bank of Ireland (CBI) has said that... International travel expenditure across Europe is projected to grow by 11 per cent... White House economic adviser Kevin Hassett has said that three trade agreements are... US corporate profits fell in the first quarter by the most since 2020, indicating... Tesla shares rose more than 2 per cent on Thursday after news that chief executive... Irish advertising, marketing and communications agencies expect client spending to... Asda has promised to keep slashing prices to widen the gap with rival supermarket...
Irish Examiner
5 days ago
- Business
- Irish Examiner
Irish bitcoin buyers clouded by an overwhelming sense of distrust
It's 9.30am on a Saturday, and more than 500 people have flocked to Dublin's Green Isle Hotel. Queues of eager attendees arrive early to register for what would later be described as the first day of the rest of their lives. Searching for financial freedom, how to get rich quick, and ways to protect their wealth from bad actors, these people are looking to the event for answers. This is the Bitcoin Ireland Conference 2025. We've all heard the warnings about unbacked cryptocurrencies like bitcoin. 'Like buying a lottery ticket,' in the words of Central Bank of Ireland governor Gabriel Makhlouf, who has likened it more to a Ponzi scheme than a legitimate investment. However, at this conference, the governor's warning falls on deaf ears. If anything, his disapproval only further emboldens these sceptics to buy more. Unlike their portfolios, the crowd was largely diversified. Young adults from the age of 17 sat alongside retirees. Attendees from across Ireland bonded with people from Europe and beyond. Women of all ages also helped fill seats, with a 'Women in Bitcoin' initiative and a women-only panel helping to boost engagement. Naval gazing... Just after 10.30am, we were already warmed up, with the third speaker of the day telling an attentive crowd that fiat currency was a scam used by governments and central banks against you and to enslave you. 'Bitcoin is sovereign. You are not,' warned Karl Deans of the British-based Sovereign Project, an organisation known for its radical stance against taxation. Operating on the view that nobody is required to obey laws they have not explicitly consented to, the group offers paid courses on how to protect your signatures, titles that can 'steal your status,' and how to 'short circuit a fraudulent court'. 'Mr is the lowest-ranking officer on a vessel,' Mr Deans told conference attendees. 'If you are a Mr, you cannot question the general. 'This is why they have an infantry in the army. They're infants. They cannot speak. That's why you have a soldier, because he sold his soul to the service.' Putting aside his fundamental misunderstanding of navy rankings and basic etymology, Mr Deans's fixation on words and their origin set the conspiratorial scene that would later become omnipresent throughout the conference. The 'financial astrologer' His talk was followed by the second female speaker of the morning, Claire Marrinan, who introduces herself as a 'financial astrologer'. Her website, The Bitcoin Zodiac, explores the 'dynamic world of cryptocurrencies through the lens of financial astrology', and offers courses on mastering cryptocurrency and blockchain that can be unlocked for just $149. Her philosophy is that by analysing the position of celestial bodies, it can help predict macro trends and asset fundamentals, which can ultimately lead to predicting price action. However, Ms Marrinan does not claim to be an expert and wouldn't dare to call herself one. Artwork displayed at Bitcoin Ireland Conference which was available to purchase with Bitcoin. 'We outsource every single thing in our lives to an expert,' she says during a panel discussion alongside like-minded bitcoin advocates. 'This has been an absolute scam. Now is the time to take back. Educate yourself, whether it's your health, educating your children, or your finances. 'Every single aspect of your life that we outsource to experts, we need to reclaim. We can first start by buying bitcoin.' Distrust as a hallmark From the word go, the conference was clouded by an overwhelming sense of distrust. Not just in governments or central banks, but in every facet of everyday life. As Ms Marrinan emboldened the audience to take matters of health and education into their own hands, I watched as a man sitting in front of me studied his phone intently. He wasn't checking messages or scrolling on social media, he was examining the security cameras set up all around his home — both outside and in. He spent minutes replaying footage of a family member as they cooked breakfast in the kitchen, before meticulously scrutinising all other camera angles placed within the house. He checked the cameras twice in one hour. The price of bitcoin currently stands at around €96,000, having peaked at more than €102,000 at the beginning of this year. It remains volatile, with monthly changes oftentimes exceeding 30% up or down. But its volatility is not a concern to this conference's crowd. As they see it, it's about taking a long-term view. This is reflected in the term HODL ('hold on for dear life'), a popular mantra among crypto enthusiasts. Confidence in Bitcoin 'Bitcoin still has potential to reach €7m, maybe €8m,' one conference investor tells me. Crediting himself for being ahead of the curve, having first bought bitcoin more than seven years ago when it averaged around just €7,000, he says he's since been able to leave his job as an architect. How? By selling his house to buy bitcoin. 'I never have to work a day again, I'm sorted now. My only regret is that I didn't buy more sooner,' he tells me, urging me to take his advice and buy some bitcoin of my own. Standing beside him was an old college pal of his who joined the bitcoin game much more recently, first buying it just over 18 months ago. He sees his financially free friend as somewhat of a guru, looking to replicate his success so he too can retire early. That hasn't happened yet and, given that he too has sold his home on the back of his friend's advice, he's running out of options. I look to my friend, and I want what he has. I'm in a job that I hate while trying to support a young family. It's incredibly tough. I want the freedom and the security he has, so I don't have to worry about these things. To these people, bitcoin is not just an asset but a lifeline. It offers an escape from the grind of a nine-to-five office job which, according to them, is no better than a prison cell. For every investor who has already won big, there are four or five others who want to take their first step on the bitcoin ladder but can't due to financial constraints. Many feel powerless, unable to join in on the fun while still enslaved by the central banks — but at least they're in the know. Many conspiracy theories are predicated on the idea that those involved in them know something that the general public doesn't. This was relayed to me many times by attendees and even the event organiser who, upon hearing that I had an undergraduate degree in economics and a master's in finance, told me that I knew nothing about money or its value, adding that a young woman like me would want to educate herself properly about the things mainstream education refuses to teach. Choose the orange pill... Unlike the other attendees, I have yet to be 'orange-pilled' — a Matrix-inspired term describing those who have declared their dedication to bitcoin. Filled with an intellectual superiority, bitcoin enthusiasts speak with convincing authority that is compounded by an overwhelming sense of urgency. You need to buy bitcoin, and you need to buy it now. 'If you want your last name to mean something in this world, buy as much bitcoin as you can,' one conference speaker said. Central Bank governor Gabriel Makhlouf said in 2023 that buying cryptocurrencies was akin to buying a lottery ticket, saying: "Describing it as 'investment' is, needless to say, an abuse of the word." Picture: Vivek Prakash/Bloomberg Newcomers to bitcoin eat this up, with many not realising that a speedy push to buy and a HODL mindset bodes well for those who already own it. The more people that buy and hold it, the higher the price goes, and the more profit made by long-term investors. While conspiratorial at its core, it would be disingenuous to describe all 500-plus attendees as paranoid truth seekers. Their conclusions may be irrational, but what brought them there is not. ...or a lottery ticket They want to be the next great success story. They want the financial freedom these gurus promise. Most are completely disinterested in any argument that questions the legitimacy of bitcoin or its upward trajectory. For a second, the strength of the echo chamber almost convinced me that I needed to consider this. That was until I remembered that many speakers believed they should buy bitcoin when Mercury is in retrograde. So will I be buying bitcoin as a result? Probably not, but I might treat myself and buy a few lottery tickets instead.
