ECB’s Philip Lane says euro liquidity lines can extend its global reach
ECB chief economist Philip Lane said in Shanghai that providing liquidity backstops to foreign central banks can strengthen the euro’s international role and extend the reach of ECB monetary policy, including its ability to meet its inflation mandate. Reuters reports that more than 30 central banks have expressed interest in the ECB’s expanded euro liquidity facilities.
Bottom line — More than 30 central banks have shown interest, but Lane says access should be limited to close financial partners able to repay euro liabilities.
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Lane said liquidity lines can bolster confidence in the euro and reduce risks associated with using it, according to Reuters.
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The ECB’s EUREP facility lets foreign central banks obtain euros against euro-denominated collateral; Lane said it could support euro-area bond markets through purchases by official reserve managers, Reuters reports.
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ECB President Christine Lagarde recently said the bank was reviewing its currency swap-line network, which includes arrangements involving the US Federal Reserve and the People’s Bank of China, according to Reuters.
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Bloomberg separately reported Lane’s argument that wider international use of the euro can influence foreign as well as domestic demand, helping monetary policy transmission.