The European Central Bank unveiled plans yesterday to widen access to its euro liquidity backstop, making it globally available and permanent in a bid to bolster the international role of the single currency.
Access to such repo lines, a crucial source of funding during times of market stress, has been limited to just a handful of mostly Eastern European countries but ECB President Christine Lagarde has long seen the facility as a tool to boost the euro’s global reach.
“The ECB needs to be prepared for a more volatile environment,” Lagarde said at the Munich Security Conference, the first time an ECB chief spoke at the event.
“We must avoid a situation where that stress triggers fire sales of euro-denominated securities in global funding markets, which could hamper the transmission of our monetary policy,” she said in announcing the new facility.
The facility, to be available from the third quarter of 2026, will be open to all central banks around the world, provided they are not excluded for reputational reasons, such as money laundering, terrorist financing or international sanctions, the ECB said.
“This facility also reinforces the role of the euro,” Lagarde said. “The availability of a lender of last resort for central banks worldwide boosts confidence to invest, borrow and trade in euros, knowing that access will be there during market disruptions.”
Used when banks are unable to obtain funding on the market, the repo line allows lenders to borrow euros from the ECB against high-quality collateral, to be repaid at maturity along with interest.
Unlike previous lines, which had to be extended from time to time, the new facility will provide standing access for up to 50 billion euros.
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