The European Central Bank has decided to enhance a facility that provides emergency euro loans to central banks outside the euro area, with the changes due to take effect in the third quarter of 2026.
The updated Eurosystem repo facility for central banks, known as EUREP, is designed to provide “backstop” euro liquidity — effectively an emergency supply of euros — to non-euro area central banks in exchange for high-quality euro-denominated collateral, the ECB said on Saturday.
It added that the revamped framework will introduce standing access in principle for all central banks, unless excluded on grounds including money laundering, terrorist financing or international sanctions.
The changes will give central banks outside the euro area a way to address risks of euro liquidity shortages swiftly.
What is EUREP and why does it matter?
EUREP was first introduced in 2020 and is intended to help limit disruption in euro-denominated funding markets outside the euro area that could spill over into euro area financial conditions, the ECB said.
Liquidity lines such as EUREP support the transmission of monetary policy — meaning how ECB interest-rate decisions affect borrowing costs and financial conditions — by reducing the risk that market strains abroad interfere with euro area markets.
The ECB said the upgraded EUREP is meant to be more flexible, have broader geographical reach and be more relevant for global holders of euro securities.
The facility complements the ECB’s existing swap lines, which the bank said will remain unchanged.
