The European Central Bank said on Saturday it will open its euro repo lifeline to almost all central banks outside the euro area in an effort to bolster the single currency's international role amid geopolitical turbulence and shifting alliances.
Under the revised rules, potentially "all central banks" beyond the euro zone can borrow euros from the Eurosystem against collateral denominated in euros. The expanded access is aimed at making it simpler for foreign central banks to obtain euro funding in episodes of foreign exchange stress, strengthening their ability to address liquidity shortages.
Operational timing and policy context
The revamped facility will become operational in July. ECB President Christine Lagarde has framed the move as part of a wider push to seize what she described as the euro's "global moment", citing heightened uncertainty about U.S. economic policy and renewed debate over the dollar's entrenched dominance.
What is Eurep?
Eurep is the Eurosystem's repo facility for central banks, created during the pandemic in 2020. It allows participating central banks to borrow euros from the ECB against high-quality collateral that is denominated in the single currency. Access to such repurchase agreements is designed to strengthen a foreign jurisdiction's resilience to foreign exchange liquidity shocks and to provide a tool to stabilise the domestic banking sector when needed.
Who will be able to borrow from Eurep?
Nearly all foreign central banks will be eligible, with explicit exclusions for those subject to international sanctions or those involved in money laundering or terrorist financing. Up until now, Eurep has been limited to just eight countries that neighbour the European Union. For standing access, a central bank must submit a formal request from its governor to the president of the ECB.
Borrowing limits and collateral
Under the new terms, each participating central bank will be able to borrow up to 50 billion euros against acceptable collateral such as bonds issued by euro area governments with a good credit rating. The new cap is significantly higher than the current maximum available under the facility. The ECB emphasised that Eurep is intended as an emergency instrument; historically, repo lines of this type have seen limited use, and take-up has been modest in recent months.
Policy objectives and expected effects
The ECB said the enlarged repo line will give foreign lenders greater confidence to lend, trade and invest in euros, knowing their central banks can access the Eurosystem's lifeline if liquidity pressures materialise. Officials expect this to help boost the euro's role on the international stage, where it is currently a distant second to the U.S. dollar. At the same time, the facility should provide a degree of insulation for the euro area from market stress originating elsewhere.
Operational mechanics
Repurchase agreements under Eurep will be extended by some of the 21 national central banks that make up the Eurosystem; the ECB did not specify which ones. Importantly, there will be no restrictions on how borrowing central banks may use the cash they obtain. Previously, drawings were reserved for lending to domestic banks, but the revised framework removes that limitation.
Transparency and reporting
The ECB will no longer publish country-level data on individual central banks' use of the repo facility. Instead, it will disclose only aggregated figures showing total weekly drawings of euro liquidity across all repo lines. That aggregated reporting will replace the previous practice of providing information about individual counterparties.
Currency conversion note: $1 = 0.8427 euros.