The European Central Bank (ECB) has seen a dramatic rise in the value of its gold holdings, providing a significant counterweight to the sharp reduction of assets under its quantitative tightening (QT) program.
According to the ECB’s latest quarterly report, the central bank adjusted the market value of its “gold and gold receivables” account by €130 billion in the first quarter of 2025, bringing the total to €1.00 trillion. This figure reflects a substantial increase from €593 billion at the end of 2022, the eve of the ECB’s QT program, marking a gain of €409 billion—or 68%—purely through mark-to-market accounting.
Crucially, this adjustment is non-transactional; it is a paper valuation change with no direct impact on gold markets. Nevertheless, it significantly affects the ECB’s balance sheet. From 2012 to 2014, a similar market adjustment caused a 37% decline in the value of its gold holdings when prices fell.
This €409 billion boost in gold valuation has partially offset the overall asset reduction from QT. Since the end of 2022, while the ECB has slashed €3.09 trillion in QE assets—including bonds and loans—its total assets have decreased by a comparatively smaller €2.54 trillion, largely due to the rising gold values.
QT Asset Unwind: Loans and Bonds
The ECB’s QT efforts have targeted two major asset classes: loans to banks and bonds acquired under its Asset Purchase Programme (APP) and Pandemic Emergency Purchase Programme (PEPP).
Loan Reduction
At its peak in June 2021, the ECB’s lending programs held €2.21 trillion in loans to banks. As of now, that figure has dropped to just €24 billion—a decline of €2.17 trillion—marking the virtual completion of this aspect of QT.
Bond Roll-Off
Bond holdings reached a high of €4.96 trillion in June 2022. Since then, the ECB has steadily rolled off maturing securities without reinvestment. In December 2024, it removed the final cap on monthly roll-offs, fully stepping back from bond market intervention. Monthly bond roll-offs so far in 2025 include:
- January: -€48 billion
- February: -€62 billion
- March: -€62 billion
- April: -€49 billion
As a result, the ECB has reduced its bond portfolio by 18.5%, equivalent to €920 billion, lowering total bond holdings to €4.04 trillion—the lowest level since April 2021.
Global QT Leaders
The ECB’s asset reductions place it ahead of other central banks in quantitative tightening. Its €3.09 trillion ($3.49 trillion) drawdown surpasses the U.S. Federal Reserve, which has reduced its balance sheet by $2.26 trillion. Combined, the ECB and the Fed have offloaded $5.75 trillion in assets. Meanwhile, the Bank of Japan only began QT in 2024 and has since accelerated its pace, trailing its Western counterparts by two years. Other central banks, such as the Bank of Canada, have also significantly reduced their balance sheets as part of broader global QT efforts.
In summary, while the ECB aggressively scales back its asset holdings, the surge in gold prices has significantly padded its balance sheet, highlighting the complex interplay between market-driven asset valuations and policy-driven asset reductions.
