ECB Executive Board member Philip R. Lane has outlined the strategic importance of international liquidity lines in safeguarding the euro area's monetary policy transmission. Speaking in Shanghai, Lane emphasized that while the ECB primarily conducts refinancing operations with domestic counterparties, international lines—comprising both repo and swap arrangements—are essential to prevent upward pressure on euro money market rates during periods of global volatility.
A central component of this strategy is the enhanced Eurosystem repo facility for central banks (EUREP). This facility provides backstop euro liquidity to non-euro area central banks against high-quality euro-denominated collateral. Under the updated framework, the maximum line size for an individual central bank is set at €50 billion. EUREP is designed to offer significant liquidity enhancement, including the potential for same-day, off-market liquidity of up to €50 billion in a single transaction, which encourages the holding of longer-duration euro-denominated bonds.
Onboarding for the enhanced EUREP facility is already underway, with the first foreign central banks having completed the process at the beginning of October 2026. More than thirty central banks have expressed interest in the facility over the past six months. Once the onboarding process is finalized, participating central banks will be able to draw from the facility starting in the fourth quarter of 2026.
Loans provided through EUREP are priced at the main refinancing operations (MRO) rate plus a spread determined by the Governing Council to maintain its function as a backstop. The maturity for a single transaction ranges from one day to one week, with the possibility of extensions. The facility aims to improve the playing field between highly liquid and less liquid euro area sovereign bonds, as well as Eurosystem-recognized supranational bonds.
Lane distinguished the roles of repo and swap lines, noting that swap lines complement EUREP by allowing for the use of local-currency collateral. While EUREP focuses on supporting the global euro-denominated debt securities market, swap lines work more directly through the bank credit channel. Because swap lines entail higher risks, the ECB restricts them to jurisdictions with highly-rated sovereigns capable of repaying euro debt.
The expansion of these liquidity tools is expected to bolster the international role of the euro. By reducing the risks associated with the currency, these lines support wider usage in trade invoicing and settlements. This internationalization can lead to increased volumes of euro-denominated credit and facilitate 'currency switching,' where foreign exchange loans previously issued in other currencies are transitioned into euro, thereby strengthening the effectiveness of ECB monetary policy.