FRANKFURT — The European Central Bank said Thursday that it would nearly double its capital reserves, a step that had been expected as a way for the bank to maintain its integrity as its holdings in European government bonds increase.
The E.C.B. said the increase in capital to €10.76 billion, or $14.2 billion, from €5.76 billion, the first such increase in 12 years, would help it to better offset risks as the volume of its financial activities grew.
“The capital increase was deemed appropriate in view of increased volatility in foreign exchange rates, interest rates and gold prices as well as credit risk,” the E.C.B. said in a statement.
National central banks, which effectively function as E.C.B. shareholders, will supply the additional capital in three annual installments, starting Dec. 29. The E.C.B. will use its own profits to help in the financing, leaving the central banks to pay €3.5 billion over three years.
The gradual increase may be designed to deflect criticism that the increase is part of another taxpayer-financed bank bailout. But the capital increase also sends a signal to euro-zone governments, which have often depended on the E.C.B. to cope with the sovereign debt crisis, that the help is not cost-free.
“The bank wants to send a clear signal to politicians that the bank’s bond purchases are not without risk,” Jörg Krämer, the chief economist at Commerzbank in Frankfurt, wrote in a note.
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