The European Central Bank (ECB) is pushing for a stronger global role for the euro by offering liquidity safety nets to foreign countries. ECB chief economist Philip Lane made this case during a closed-door event in Shanghai, emphasizing that such measures could bolster confidence in the euro and reduce associated risks. Lane noted that demand for the ECB’s expanded euro liquidity facilities has been robust, with over 30 central banks expressing interest.
Lane argued that greater international use of the euro would enhance the ECB’s ability to meet its inflation mandate by extending the global impact of euro area monetary policy. He highlighted the ECB’s EUREP facility, which allows foreign central banks to obtain euros against collateral denominated in the single currency, as a tool to boost bond markets in the 21-country bloc. Increased purchases by official reserve managers could further support this goal.
ECB President Christine Lagarde recently mentioned that the bank is reviewing its network of currency swap lines, which enable major central banks, including the US Federal Reserve and the People’s Bank of China, to exchange their own currencies for euros. Lane suggested that such arrangements could encourage borrowing in euros but should be limited to central banks in economies with close financial ties to the euro area and a clear capacity to repay euro liabilities.