The European Central Bank (ECB) has decided to extend the validity of the repo line arrangement which last year provided the National Bank an access to euro liquidity for the first time, determined by the provision of adequate collateral. Namely, the validity of the repo line worth up to Euro 400 million has been extended and will remain in place until March 2022. This is a great support of the ECB for the National Bank as it creates additional room for rapid and efficient action in case of any protraction of the corona crisis effects on the domestic economy and financial markets, given the uncertainty of the current global crisis.
To date, the National Bank has not used any funds from the approved repo line, given the maintenance of proper level of both denar and foreign currency liquidity of the banking system, with a noticeable upward trend of the banks' liquid assets in recent months. However, liquidity support received from the ECB shows that our central bank is highly capable of achieving its goals and objectives amid potential tightening of financial conditions in international markets caused by the corona crisis and the risks it poses to the global economy. In the case of such a scenario, the ECB will provide the National Bank a prompt access to euro liquidity under favorable market conditions.
An additional advantage of the repo line arrangement set up between the ECB and the National Bank is that it provides easier access to euros, without the National Bank permanently selling securities at possibly less favorable market conditions on the international financial markets. If necessary, the use of funds from the repo line can be gradual, until the maximum amount is reached.
The repo line approved from the ECB is a confirmation of the National Bank’s readiness to adequately and timely respond to challenges posed by the current crisis and to successfully maintain liquidity and macro-financial stability.
The National Bank expressed gratitude to the ECB for the trust and support provided by extending this repo line arrangement.
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