EUREP

Under the Eurosystem repo facility for central banks (EUREP) the Eurosystem lends euro to non-euro area central banks and monetary authorities (hereafter referred to as “foreign central banks”) against high-quality euro-denominated securities via collateralised transactions.

EUREP is a standing facility for the temporary provision of euro liquidity to foreign central banks. There are no ex ante restrictions on how foreign central banks can use funds borrowed under EUREP.

Transactions are priced at the main refinancing operations (MRO) rate plus a spread set by the Governing Council. Given the backstop pricing, usage is expected to take place only under stressed market conditions.

To mitigate risks for the Eurosystem, the foreign central bank must not be subject to concerns regarding money laundering and terrorist financing or to Union restrictive measures and United Nations Security Council resolutions on sanctions. It must also comply with financial risk mitigation measures.

EUREP is operated in a decentralised way. The ECB sets the common framework and coordinates implementation, while selected euro area national central banks act as operational counterparts to foreign central banks.

EUREP helps support the smooth transmission of monetary policy in the euro area by ensuring the timely, consistent and broad provision of backstop funding to foreign central banks.

This helps mitigate potential negative spillover effects on euro area financial market conditions by addressing risks of disruption in euro-denominated funding markets outside the euro area from various sources. It is particularly important in times of growing fragmentation and uncertainty.

Data on euro provision through EUREP and swap lines