A year ago, Germany’s Sberbank was up by nearly a third on a decade-old benchmark index that has been gaining strength.
Today, the Sber is down by more than a fifth.
The central bank has been trying to bring down the index’s volatility, which has plunged from 10 per cent in the autumn of last year to 1.8 per cent today, to help it manage the crisis.
But the latest drop comes as it struggles to cut costs.
Its annual budget for the coming year is estimated at €1.8 billion ($2.3 billion), a far cry from the €6.3 trillion it has in the bank at the start of last month.
Inflation is also rising, the biggest of any European country.
The Bundesbank has been cutting the price of bonds, reducing lending and increasing cash to the public.
It also has begun to buy back bonds.
Its policy makers say they will do this by selling bonds at lower prices.
But that would only happen when the central bank had enough reserves to meet its needs.
It is now aiming to sell the bulk of its bond holdings to the private sector by the end of this year.
“I’m worried about the pace of change in the financial markets and we will see what happens,” said Markus Wahl, chief economist at the BDI.
“But it looks like the German economy is still recovering.”
A year ago the index was up more than 10 per a year.
Today it is down almost 4 per cent.
It is not just a question of whether the index will go back to the previous high it reached last September.
The index has been a source of strength for Germany’s big banks, which have been buying more bonds.
The government, meanwhile, has taken on a more active role in helping the economy, with the central banks buying up large amounts of government debt to help with the bailout.
A strong economy means the banks have been able to buy more bonds than they could buy before the crisis, which is what is needed to help them weather the shock.
The banks also have the cash to buy bonds at much lower prices, which will help the government pay down its debt.
“The central banks are in a position to buy the bonds and to keep the government solvent,” said Stefan Reichenbach, a professor at Berlin’s Free University.
“That is a very positive thing.”
The central bankers have been trying hard to make the banks and the markets more efficient, in an effort to keep inflation low.
In the past few months, the banks bought €30 billion in bonds, about the same amount as they did in September last year.
But now that they have bought back a significant amount, they will have to keep buying even more.
“We are seeing that the central bankers are starting to do something to make them more efficient,” said Andreas Weil, a portfolio manager at the private fund FTSE M&G.
The biggest reason for the slide is the German debt crisis.
The ECB has bought back some €7 billion in public debt to shore up its balance sheet, but it has also taken out large amounts in bonds.
The government has already borrowed almost €2 billion in the last three months.