It also wrote down its €1 trillion in gold by €30 billion due to its price decline in euros in Q2.

By Wolf Richter for WOLF STREET.

The ECB’s two big QE categories – loans to banks and bonds – declined by €64 billion in June, to €3.98 trillion combined, the lowest since June 2020, according to the ECB’s weekly balance sheet.

Since peak-balance sheet at the end of QE in June 2022, the ECB’s QT programs have shed €3.18 trillion ($3.72 trillion), or 44%, of its loans and bonds combined.

The ECB also has non-QE assets on its balance sheet, including close to €1 trillion in gold, which it adjusts to market value on a quarterly basis. The Q2 adjustment came on the current balance sheet: the first write-down in nearly two years (-€30 billion), after €600 billion in write-ups due to the market price of gold in euros.

Loans to banks: -€5 billion in June, -€2.18 trillion, or -99% from the peak in June 2021; only €20 billion remain, the lowest in the ECB’s data going back to 1999 (blue in the chart below).

Bonds: -€60 billion in June, -€1.0 trillion, or -20%, since the peak, to €3.96 trillion, the lowest since April 2021. This year, the bond roll-off has averaged €55 billion per month (red in the chart below).

In December 2024, the ECB stepped away from the bond market entirely by removing the last remaining cap on the monthly roll-off. Since then, it has not replaced maturing bonds, and whatever matures comes off the balance sheet. These amounts vary from month to month.

Its bond holdings are mostly government securities but also include some private-sector securities.

Gold holdings written down due to price drop in euros.

The ECB values its holdings of “gold and gold receivables” at market prices in euros. Every quarter, it adjusts its holdings to market value. Its current weekly balance sheet revealed the Q2 mark-to-market adjustments – this time a downward adjustment.

As the price of gold (priced in euros) started surging in 2019, the ECB wrote up its gold holdings. From mid-2019 through Q1 2025, the ECB wrote up its gold holdings by 149% or by €600 billion, to €1.0 trillion.

But in Q2, the price of gold in euros fell, and the ECB wrote down its holdings by €30 billion, on the current weekly balance sheet.

Mark-to-market adjustments of its gold holdings are just paper adjustments at the end of the quarter and do not involve purchases or sales or money printing or QE or QT.

These mark-to-market adjustments of its gold holdings are why total assets have declined by less than the QT assets since the beginning of QT. Total assets declined by $2.69 trillion ($3.15 trillion), or 30%, to $6.14 trillion, the lowest since June 2020.

Conversely, in June, the €30 billion write-down of gold at the end of Q2 increased the drop of the ECB’s total assets to €101 billion.

The chart below shows the ECB’s holdings of gold (yellow), loans (blue), bonds (red), and total assets (dotted green line):

The ECB is way ahead of the Fed, which has shed $2.31 trillion under its QT program. And the Bank of Japan has accelerated its QT this year, but is two years behind the Fed and the ECB. Smaller central banks, including the Bank of Canada, have also substantially reduced their balance sheets.

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