ECB reports loss of €477m

The European Central Bank (ECB) today reported a net loss of €477m in 2003 compared with a profit of €1,220m in 2002.

The bank said this loss was due primarily to the to exchange rate movements, which hit the value of the bank's holdings of dollar-denominated assets. Lower domestic and foreign interest rates were also a factor.

The ECB's regular income is derived primarily from investment earnings on its holding of foreign reserve assets and its paid-up capital of €4.1bn, and - since the beginning of 2002 - from interest income on its 8% share of the euro banknotes in circulation. Interest income in 2003 was adversely affected by low interest rates on both domestic and foreign currency assets.

The 2003 accounts were approved by the ECB governing council at its non-rate setting meeting today.

Despite expectations, the ECB did not make any statement on the economic impact of last week's terrorist bombings in Madrid.