In opening remarks at the Munich Security Conference, European Central Bank President Christine Lagarde linked geoeconomic fragmentation and supply-chain disruptions to a more volatile environment in which financial market stress could become more frequent. She highlighted the Governing Council’s decision to expand the ECB’s EUREP facility, a standing mechanism that provides euro liquidity against high-quality collateral, aiming to prevent stress from triggering fire sales of euro-denominated securities that could impair monetary policy transmission. Eurosystem analysis mapping hard-to-diversify inputs suggests that a sudden 50% reduction in supplies from geopolitically distant suppliers would reduce manufacturing value added by 2-3%, with impacts concentrated in electrical equipment, chemicals and electronics; Lagarde framed Europe’s push for “strategic autonomy” around independence, indispensability and diversification, warning that broad-brush approaches can impose unnecessary costs or miss chokepoints. Under the expanded EUREP design, the backstop becomes permanent rather than based on temporary lines, shifts from a regional to a global perimeter with any central bank meeting basic criteria able to request access, and is designed for faster provision with access granted by default unless there is a reason to restrict it.
European Central Bank 2026-02-14
European Central Bank expands EUREP standing euro liquidity facility to provide permanent global access for non-euro area central banks
European Central Bank President Christine Lagarde, at the Munich Security Conference, linked geoeconomic fragmentation to increased financial market volatility and announced expanding the ECB's EUREP facility to provide euro liquidity globally against high-quality collateral. The expanded EUREP aims to prevent stress-induced fire sales of euro-denominated securities, with a permanent backstop and faster access for central banks meeting basic criteria.