German Central Bank profit doubles in 2017

BERLIN, Feb. 27 (Xinhua) -- The German Central Bank (Bundesbank) has doubled its annual surplus to 2.2 billion euros (2.7 billion U.S. dollars) in 2017, the Frankfurt-based institution told press on Tuesday.

Bundesbank President Jens Weidmann explained that profits rose as a consequence of "higher excess liquidity" connected to negative interest rates charged on some of the liabilities in the central bank's balance sheet.

The lion's share of the resulting profit, 1.9 billion euros, will be directly transferred to the budget of the federal government. While substantially higher than the 400 million euros it received in 2016, the figure is still slightly lower than the 2.5 billion euros anticipated by Berlin.

The Bundesbank witnessed income from interest rates grow by 1.5 billion euros to 5.2 billion euros, but also simultaneously increased the value of its reserves by 1.1 billion euros to 16.4 billion euros. According to Weidmann, his institution was hereby responding to a "rise in the risk of interest rate changes" due to continuation of ultra-loose monetary policy in the Eurozone.

Weidmann once again called for the European Central Bank (ECB) to wind down its bond-purchasing program worth 2.55 trillion euros by the end of 2018. The Bundesbank president argued that there would be no reason not to "normalize" monetary policy if the economic recovery in the Eurozone continued alongside sustained price growth.

The German central bank president is widely considered to be one of the most outspoken critics of ECB President Mario Draghi and has repeatedly expressed concerns about the legality and effects of indirectly financing Eurozone governments through large-scale purchases of sovereign bonds on secondary markets.

Faced with questions on Monday about his chances of succeeding Draghi in the role of president in 2019, however, Weidmann was unwilling to comment on media speculations about the future composition of the ECB governing board. The choice of Eurozone finance ministers in favor of the Spaniard Luis de Guindos to assume the post of ECB vice-president is viewed by some to have enhanced the odds of a German candidate being handed the top-position at the monetary governance organization.

The unorthodox ultra-loose policy stance adopted by the ECB in 2015 and a related low interest rate environment remain highly controversial in Germany, although the federal government in Berlin and Federal Statistical Office have pointed out that the ECB's intervention was at least partially responsible for record budget surpluses and strong national gross domestic product (GDP) achieved in recent years. Enditem