German Central Bank Increases Reserves

The German central bank set aside more reserves to cover potential losses that it might incur due to actions taken by the ECB to stabilize interest rates on sovereign debt.  The ECB is keeping sovereign interest rates low by purchasing sovereign bonds, and by loaning money to commercial banks backed by more risky collateral.  The ECB has taken these steps to keep the eurozone intact.  Losses that might be taken by the ECB are covered by the central banks in each eurozone nation.  Germany stands to lose the most if that happens.

The German central banks has never been happy with the policies of the ECB.  It believes that the financially troubled nations should take the steps necessary to improve the performance of their economies so that they do not need to borrow money.  However, the actions taken by the German central bank are a sign of continuing concern about the health of the eurozone.