ECB has announced its decision to extend temporary euro liquidity lines by nine months, which will see it reach to March 2022. The primary objective of these euro liquidity lines is to meet possible euro liquidity needs in non-euro area countries in light of the dysfunctions many markets are experiencing due to COVID-19.
In a press release earlier today, the ECB stated that “the European Central Bank (ECB) decided in December 2020 to offer a nine-month extension of its temporary swap and repo lines with non-euro area central banks. The central banks of Albania, Croatia, Hungary, the Republic of North Macedonia, Romania, San Marino and Serbia have agreed to extend the duration of their euro liquidity lines with the ECB to March 2022.”
The lines were established earlier in 2020 to provide euro liquidity to banks and other financial institutions in the respective countries via the applicable national central banks.
Furthermore, these lines will help prevent spillback effects on euro area financial markets and other economies that might adversely affect the smooth transmission of ECB monetary policy. This temporary euro liquidity lines was previously scheduled to expire in June 2021. A repo line allows central banks to borrow euro up to a preset amount in exchange for sufficient euro-denominated collateral.
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