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Central bank liquidity lines

Liquidity lines between central banks are monetary policy instruments to alleviate tensions in international funding markets that could hamper the smooth transmission of domestic monetary policy. They enable central banks to receive currencies issued by other central banks in exchange for some form of collateral based on predefined terms. Lending conditions make this short-term borrowing attractive only under stressed market conditions.

Eurosystem liquidity lines are an important backstop monetary policy tool that supports the smooth transmission of monetary policy in the euro area. 

How do liquidity lines support the smooth transmission of monetary policy?

Lending euro

By lending euro to non-euro area central banks, liquidity lines can help to address possible shortages of euro funding in those countries in the event of market stress. This helps mitigate the risk of financial tensions abroad spilling over into the euro area. Specifically, liquidity lines help contain upward pressures on euro money market rates that can arise when banks abroad struggle to obtain euro.

They also discourage foreign investors from resorting to fire sales of euro-denominated securities during periods of stress, thereby further stabilising markets. In this way they promote financial stability, which is a prerequisite for price stability.

As a side effect, they also strengthen the role of the euro in international financial markets, which in turn further enhances the effectiveness of ECB monetary policy transmission. 

Borrowing foreign currency

By borrowing foreign currency from non-euro area central banks, the ECB can provide foreign currency to domestic counterparts in periods of stress, when market funding mechanisms dry up. This supports euro area financial stability, which is a precondition for price stability.

Two types of liquidity lines

The Eurosystem establishes liquidity lines using collateralised transactions and swap agreements. Under EUREP, the Eurosystem lends euro against high-quality euro-denominated securities. With swap lines, the Eurosystem lends euro against foreign currency or borrows foreign currency against euro.

EUREP

Under EUREP, the Eurosystem lends euro to non-euro area central banks and monetary authorities against high-quality euro-denominated securities via collateralised transactions.

Learn more about EUREP
Swap lines

Swap lines between two central banks are currency swap arrangements to exchange currencies at a predetermined rate, with a commitment to reverse the transaction at a specified future date.

Learn more about swap lines

Chronology of Eurosystem liquidity lines

Read about the main changes to the Eurosystem’s framework for liquidity lines.

View the chronology of Eurosystem liquidity lines

Data on euro provision through EUREP and swap lines

The dataset below is published weekly. It provides information on the aggregate daily amount of liquidity provided across all central bank liquidity lines, denominated in euro, as of January 2020.

Looking for the latest on the central bank liquidity lines?

Find it below

24 July 2026

ECB to start implementing enhanced repo facility for central banks

14 February 2026

Preparing for geoeconomic fragmentation

14 February 2026

ECB enhances repo facility for central banks

8 September 2025

ECB and People’s Bank of China extend bilateral euro-renminbi currency swap arrangement

29 January 2024

Learning from crises: our new framework for euro liquidity lines

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