IMF Working Papers

ECB Euro Liquidity Lines

By Silvia Albrizio, Iván Kataryniuk, Luis Molina, Jan Schäfer

May 5, 2023

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Format: Chicago

Silvia Albrizio, Iván Kataryniuk, Luis Molina, and Jan Schäfer. ECB Euro Liquidity Lines, (USA: International Monetary Fund, 2023) accessed March 15, 2025

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Central bank liquidity lines have gained momentum since the global financial crisis as a crosscurrency liquidity management tool. We provide a complete timeline of the ECB liquidity line announcements and study their signalling and spillback effects. The announcement of an ECB euro liquidity line decreases the premium paid by foreign agents to borrow euros in FX markets relative to currencies not covered by these facilities by 51 basis points. Consistent with a stylized model, bank equity prices increase by around 1.75% in euro area countries highly exposed via banking linkages to countries whose currencies are targeted by liquidity lines.

Subject: Asset and liability management, Asset prices, Currencies, Currency markets, Currency swaps, Financial markets, Foreign exchange, Liquidity, Money, Prices

Keywords: Asset prices, Central bank liquidity line, Central bank swap and repo lines, Cross-currency liquidity management tool, Currencies, Currency markets, Currency swaps, ECB Euro liquidity line, ECB liquidity line announcement, Global, Liquidity, Liquidity facilities, Spillbacks.

Publication Details

  • Pages:

    58

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2023/096

  • Stock No:

    WPIEA2023096

  • ISBN:

    9798400240881

  • ISSN:

    1018-5941

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