Muristek
European Central Bank (ECB) sign is pictured outside its headquarters in Frankfurt, Germany, April 21, 2016. — Reuters pic
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FRANKFURT, March 28 — The European Central Bank said today it had extended liquidity lines with central banks in five neighbouring countries to contain the risk posed to the eurozone by the war in Ukraine.
The lines were designed to “prevent spillover effects” in the eurozone “in the context of heightened geopolitical tensions triggered by the Russian invasion of Ukraine”, the ECB said in a statement.
The Frankfurt-based institution agreed to open a new “precautionary” swap line with the Polish central bank under which it could access up to €10 billion (RM46 billion).
The ECB also extended repo agreements with central banks in Hungary, North Macedonia, San Marino and Albania worth just under €5 billion.
Swap lines agreed with the ECB allow central banks to obtain euros in exchange for their own currency and are aimed at maintaining liquidity in euros.
Repo lines meanwhile allow central banks to put their hands on the currency using euro-denominated financial assets as collateral.
The ECB opened the repo lines with the quartet of central banks in 2020 to help them manage the financial instability caused by the coronavirus pandemic.
The agreements were due to run out at the end of March this year but have been extended until mid-January 2023.
After the latest meeting of the ECB’s governing council earlier this month, President Christine Lagarde pledged to “take whatever action is needed” to stabilise the eurozone against the background of the conflict.
Lagarde also raised the possibility of extending liquidity lines directly to Ukraine, saying the bank was “exploring” ways to support the local authorities. — AFP