What is the purpose of EUREP?
EUREP aims to support the smooth transmission of monetary policy in the euro area. By providing euro liquidity to non-euro area central banks, EUREP helps to address the risks of euro funding pressures globally that could otherwise spillover to euro area financial markets. As a liquidity backstop it also helps to support the smooth functioning of financial markets.
What are the key features of EUREP?
EUREP is a standing facility for the temporary provision of euro liquidity to non-euro area central banks. Backstop pricing makes this short-term borrowing attractive only under adverse market conditions. Non-euro area central banks can borrow up to €50 billion against euro-denominated marketable assets issued by central or local/regional governments from the European Economic Area, Eurosystem-recognised agencies that fulfil the quantitative criteria, or Eurosystem-recognised supranational entities. To be eligible as collateral, these assets must be in haircut categories I or II and meet the minimum rating requirement of credit quality step 3 under the Eurosystem credit assessment framework. Covered bonds and assets issued by entities closely linked to the accessing central bank are excluded, and all other eligibility criteria of the general collateral framework must be fulfilled.
Under the new EUREP framework, the ECB will no longer publish information about which central banks have accessed its repo lines. Instead, it will provide details of overall weekly drawings of euro liquidity across all repo lines.
EUREP complements the bilateral swap lines arranged by the ECB with non-euro area central banks.
Who is eligible for EUREP?
In principle, all non-euro area central banks can request access to EUREP, unless excluded on the grounds of, in particular, money laundering, terrorist financing or international sanctions. Access to EUREP and drawings under the facility are subject to the approval of the Governing Council.
What can EUREP liquidity be used for?
There are no ex ante restrictions on how non-euro area central banks can use funds borrowed under the revised EUREP, as opposed to the previous EUREP facility, which was reserved for lending by non-euro central banks to their domestic financial institutions. In view of the increased geographical scope, central banks worldwide can use the euro liquidity provided under EUREP to address a wider range of temporary funding needs.
Does EUREP increase the Eurosystem’s risk exposure?
Under the revised EUREP the Eurosystem continues to provide liquidity to non-euro area central banks against a set of very high-quality collateral. The Eurosystem also has a toolbox of additional risk mitigation measures at its disposal if needed. Any residual financial risk is small and can be justified as being proportionate to the policy objective of the facility. Moreover, the Governing Council retains the discretion to apply additional risk mitigation measures, where necessary.
Is EUREP implementation decentralised?
Yes. While the ECB establishes the common framework and coordinates the implementation of EUREP, selected Eurosystem national central banks (NCBs) act as the respective legal counterparts to non-euro area central banks using the facility. NCBs are responsible for setting up the required cash and custody accounts and handling transactions, following the conditions of the Eurosystem reserve management services. Onboarding of non-euro area central banks is planned to start in the third quarter of 2026.
How can a central bank request access to EUREP?
A central bank can request access via a formal request letter from the governor addressed to the ECB President. These formal requests and any related queries should be sent to EUREP@ecb.europa.eu.