The euro steadied near its lowest in a month on Wednesday, nursing steep losses this week as investors counted the cost of the U.S.-EU trade pact. <\/p>\n
Olena Malik | Moment | Getty Images<\/p>\n
The European Central Bank unveiled plans on Saturday to widen \u2060access to its euro liquidity backstop, making it globally available and permanent in a bid to bolster the international role of \u200bthe single currency.<\/p>\n
Access to \u200bsuch repo lines, a crucial \u200bsource of funding during times of market stress, has been limited to just a handful of mostly Eastern European countries but ECB President Christine Lagarde has long seen the facility as a tool to \u2060boost the euro’s \u200cglobal reach.<\/p>\n
“The ECB needs to be prepared for \u2060a more volatile environment,” Lagarde said at the Munich Security Conference, the first time an ECB chief spoke at the event.<\/p>\n
“We must avoid a situation where that stress triggers fire sales of euro-denominated securities in global funding markets, which could hamper \u200cthe transmission of our monetary policy,” she said in announcing the new facility.<\/p>\n
The facility, to be available from the third quarter of 2026, will be open to all \u200bcentral banks around the world, provided they are not excluded for reputational reasons, such as money laundering, terrorist financing or international sanctions, the ECB said.<\/p>\n
“This facility also reinforces the role of the euro,” Lagarde said. “The availability of a lender of last resort for central banks \u2060worldwide boosts confidence to invest, borrow and trade in euros, knowing that access will be there during market disruptions.”<\/p>\n
Used \u200cwhen banks are unable to obtain funding on the market, the \u200crepo line allows lenders to borrow euros from the ECB against high-quality collateral, to be repaid at maturity along with interest.<\/p>\n
Unlike previous lines, which had to be extended from time to time, the new facility will provide \u2060standing access for up to 50 billion euros.<\/p>\n
With investors reassessing the dollar’s status due to \u2060the unpredictable nature of U.S. President Donald Trump’s economic policy, Lagarde has argued this \u2060was the time for the euro to gain market share, but this required a revamped financial and economic architecture.<\/p>\n
The U.S. Federal Reserve maintains a similar tool, \u200bcalled the FIMA Repo Facility, which essentially protects the \u200cTreasury market since stress might otherwise force lenders to sell government bonds below market value.<\/p>\n
“These changes aim to make the facility more flexible, broader in terms of its geographical reach and more relevant for global holders of euro securities,” the ECB said in a statement.<\/p>\n
Such guaranteed access to euros could naturally increase demand for \u200beuro-denominated assets and encourage banks outside the 21-nation \u200ceuro zone to buy assets from the bloc.<\/p>\n","protected":false},"excerpt":{"rendered":"The euro steadied near its lowest in a month on Wednesday, nursing steep losses this week as investors…\n","protected":false},"author":2,"featured_media":300574,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[2667,964,72,122,11236,11235,61,60,123],"class_list":{"0":"post-300573","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-banks","9":"tag-breaking-news-markets","10":"tag-business","11":"tag-business-news","12":"tag-central-banking","13":"tag-currency-markets","14":"tag-ie","15":"tag-ireland","16":"tag-markets"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/300573","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=300573"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/300573\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/300574"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=300573"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=300573"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=300573"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}