The European Central Bank (ECB) on Thursday announced it will offer euro loans against collateral to central banks outside the euro area to backstop funding markets amid the coronavirus pandemic.

“Eurosystem repo facility for central banks (EUREP) introduced as precautionary backstop to address pandemic-related euro liquidity needs outside euro area,” the bank said in a statement.

New facility will be available until June 2021 and allow a broad set of central banks to borrow euro against euro-denominated debt issued by euro area central governments and supranational institutions.

“EUREP addresses possible euro liquidity needs in case of market dysfunction resulting from the COVID-19 shock that might adversely impact the smooth transmission of ECB monetary policy,” it noted.

The new repo complements the ECB’s bilateral swap and repo lines and reflects the importance of the euro in global financial markets.

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