According to the CNB, the economic result was mostly affected by exchange rate losses resulting from the strengthening of the koruna at the end of last year. In total, the CNB reported an exchange rate loss of 91 billion crowns last year, while in 2020 it was a profit of eight billion crowns.
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According to the bank, revenues from foreign exchange reserves then made a positive contribution to the management of 80 billion crowns. The most profitable part of foreign exchange reserves last year were shares. The CNB brought the bank a record 111 billion crowns in their investments. Conversely, in the case of bonds, the central bank recorded a loss due to a decline in their market price.
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In connection with the increase in interest rates, the CNB also recorded an increase in the cost of monetary operations. This burdened the bank’s finances with interest costs paid to commercial banks for 24 billion crowns.
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The CNB’s accumulated loss arose in 2017, when the central bank reported a loss of over CZK 249 billion. The reason was an increase in foreign exchange reserves in connection with the termination of foreign exchange interventions and the subsequent strengthening of the koruna’s exchange rate. The central bank ended its foreign exchange interventions in April 2017 after 41 months.
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The bank used the profit from 2020 to cover part of the accounting loss. It rose again after this year’s profit and the CNB plans to pay it off from future profits.
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The central bank has long warned that generating profit is not its main task. That is the care for price and financial stability.
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The CNB will publish the Annual Report on the Economic Results for 2021 and the Financial Statements for 2021 by the end of March, after delivering them to the Chamber of Deputies.
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