The European Central Bank has announced plans to make its euro liquidity backstop globally accessible and permanent, a move aimed at reinforcing the single currency’s international position. The new framework will allow central banks worldwide to tap the facility, provided they meet regulatory and reputational standards, including compliance with anti-money laundering and sanctions rules.
Previously, access to such repo lines — a critical source of funding during periods of market stress — was limited mainly to a small group of Eastern European central banks. ECB President Christine Lagarde highlighted that expanding the program is part of a broader effort to maintain financial stability and support euro-denominated markets.
“The ECB must be ready for an increasingly volatile environment,” Lagarde said at the Munich Security Conference. “We want to prevent stress events from forcing fire sales of euro-denominated securities, which could disrupt the transmission of our monetary policy.”
Starting in the third quarter of 2026, the facility will provide standing access for up to €50 billion. It allows lenders to borrow euros against high-quality collateral, with repayment at maturity plus interest. Unlike previous temporary arrangements, this permanent access ensures central banks can rely on the euro even during periods of market turmoil.
The ECB views the move as a key step in boosting confidence in the euro as a global reserve currency. Guaranteed access to euro liquidity could encourage international investors and banks outside the 21-member eurozone to hold and trade euro-denominated assets more actively.
Lagarde stressed that the expanded backstop aligns with the European Union’s circular economy of finance, aiming to enhance strategic resilience and financial stability. The initiative mirrors similar tools used by other central banks, such as the U.S. Federal Reserve’s FIMA Repo Facility, which helps protect dollar-denominated Treasury markets during stress episodes.
The ECB’s decision comes at a time when the dollar faces renewed scrutiny amid unpredictable U.S. economic policy, presenting an opportunity for the euro to capture more market share globally. The central bank said the changes are designed to make the facility flexible, geographically broad, and more relevant for global holders of euro assets.
By providing a dependable lender-of-last-resort mechanism, the ECB hopes to solidify the euro’s position as a trusted international currency, supporting investment, borrowing, and cross-border trade in euros even during periods of financial turbulence.
