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In a move to enhance financial support during crises, the European Central Bank (ECB) announced on Monday its decision to lower the eligibility criteria for lending to central banks outside the European Union (EU). This adjustment is expected to simplify the borrowing process for smaller economies, such as Ukraine, when they face financial challenges.
The ECB’s new framework, influenced by experiences during the COVID-19 pandemic and Russia’s conflict in Ukraine, expands access conditions during times of crisis or when there is an elevated risk of a crisis. The intention is to offer more flexibility and support to non-EU countries grappling with economic stress.
As part of these changes, the existing repurchase-agreement facilities, commonly known as “repo” lines, have been extended until the end of the next year for countries like Kosovo, Montenegro, San Marino, North Macedonia, Andorra, Albania, and Hungary. These repo lines allow countries to borrow euros from the ECB by providing collateral.
Under the previous criteria, repo lines were only granted to countries that could potentially impact the ECB’s policy due to factors such as their size, significant use of the euro, and financial and economic ties with the EU. The revised framework aims to make access to these facilities more inclusive, especially during times of heightened economic challenges.
The ECB’s move reflects a commitment to providing support to countries outside the EU facing financial stress and reinforces the importance of international collaboration during times of crisis
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