A protective tool against foreign exchange market pressures
The European Central Bank (ECB) announced that it will activate a new euro liquidity facility for central banks outside the Eurozone starting in the fourth quarter of 2026, as the onboarding process for interested institutions is already underway. The new facility forms part of the EUREP mechanism (Eurosystem repo facility for central banks) and will allow participating central banks to draw up to €50 billion in liquidity via loans backed by high-quality euro-denominated collateral.
Liquidity without precautionary restrictions
According to the ECB, central banks that complete the onboarding process will be able to utilize EUREP funds flexibly, without predefined restrictions on their use. "Onboarded central banks can draw on EUREP funds in a flexible manner, without ex-ante restrictions," stated the ECB. Following the completion of the onboarding procedure, central banks will be eligible to draw liquidity from this line starting in Q4 2026.
A protective tool against foreign exchange market pressures
The creation of the new facility aligns with the ECB's strategy to maintain the smooth functioning of global money markets and reinforce the international role of the euro. Liquidity lines for non-Eurozone central banks serve as a "safety net" during periods of heightened volatility, ensuring that countries with close economic ties to Europe maintain access to euros when financial market pressures escalate. Loans provided through EUREP will be priced based on the ECB's main refinancing operations rate plus a spread.
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