Euro liquidity facility enhanced for non-euro area central banks

Under EUREP, the Eurosystem provides backstop euro liquidity to non-euro area central banks against high-quality euro-denominated collateral, with appropriate risk mitigants.

The updated framework introduces standing access, in principle, for all central banks, unless excluded on grounds such as money laundering, terrorist financing, or international sanctions.

These changes aim to make the facility more flexible, broader in its geographical reach, and more relevant for global holders of euro securities.

The framework will enable central banks outside the euro area to address risks of euro liquidity shortages swiftly, thereby mitigating potential negative spillover effects on euro area financial market conditions.

The ECB's existing swap lines remain unchanged and are complemented by EUREP.

Since EUREP's introduction in 2020, the world economy has undergone profound structural shifts related to geopolitics and changes in the international financial system.

These shifts have altered the dynamics of global trade and financial integration, suggesting that the macroeconomic and financial environment will remain uncertain and potentially more volatile.

More frequent financial disruptions and possible knock-on effects on euro area financial markets have the potential to hamper the smooth transmission of monetary policy.

In this context of greater fragmentation and uncertainty, Eurosystem liquidity facilities like EUREP will continue to ensure the timely, consistent, and broad provision of backstop funding for central banks.