We have all taken an important achievement from 2025 into the new year: price stability has been reestablished in the euro area. Following on from the years in which inflation rates were far too high at times, this is very good news. Price stability provides a degree of reliability in these turbulent times, making planning easier for consumers, businesses and the government.
This success is also built on trust in the promise that the euro area’s independent central banks will safeguard stability. At the same time, widespread public confidence acts as a backstop for central bank independence. The central bank was made independent so that it could fulfil its price stability mandate free from political influence. At the Bundesbank, we know from our many years of experience that central bank independence is in the very DNA of successful, effective monetary policy. Protecting this precious commodity has therefore never been more important.
Euro area inflation stabilised at around 2 % over the course of 2025. At the same time, incomes continued to rise. This means that people can afford more in real terms again – more, on average, than before the pandemic and the energy crisis. Yet surveys show that this is not necessarily how it feels to them. Many now feel poorer in everyday situations like grocery shopping. There is also concern that prices will continue to rise. We are well aware that the wave of inflation has left its mark. This makes it all the more important to stabilise inflation at our target level on a sustainable basis. We are committed to achieving this in 2026, too.
Monetary policy measures in the euro area are reflected on central banks’ balance sheets, which are still impacted by the extensive asset purchases of the past and the subsequent rise in interest rates. In 2025, these factors continued to place a significant financial burden on the Bundesbank. However, the Bundesbank’s loss for 2025 was down by more than one-half on the year. Losses are still likely to be recorded for the coming few years, too. What matters most is that our balance sheet is sound. We remain unrestricted in our ability to act. We can and will continue to do all that is needed to ensure price stability.
For the Bundesbank, 2025 was a year of intensive work. We made advances in preparations to make our money fit for the future. This encompassed work on the digital euro for the general public, central bank digital currency for banks and the next generation of euro banknotes. We worked to ensure a strong and stable financial system in Germany and Europe, for example through proposals to simplify the regulatory framework for banks. In addition, we are pressing ahead with a major programme to modernise the Bundesbank. In a fast-changing environment, we want to be more responsive, more adaptable and remain at the cutting edge of technology. Together, we are modernising the Bundesbank so that we can remain a reliable anchor, even in turbulent times.
All of this work – both external and internal – is a major team achievement, accomplished thanks to the dedication of our employees. In 2025, the Bundesbank’s staff worked with great expertise and loyalty for our common good. On behalf of the entire Executive Board, I would like to thank them very much.
I invite you to learn more about our work in 2025 in this Annual Report. However uncertain forecasts may be, one promise I can make for 2026 is that the Bundesbank will continue to stand for stable money and a stable financial system.
Professor Joachim Nagel President of the Deutsche Bundesbank
