ECB lowers bar for lending to countries outside the EU

© Reuters. FILE PHOTO: A view shows the European Central Bank (ECB) flag and the flag of the European Union in front of the ECB Building, on the day of the monthly news conference following the ECB’s monetary policy meeting in Frankfurt, Germany, September 14, 2023.

FRANKFURT (Reuters) – The European Central Bank said on Monday it would lower the bar for lending to central banks from outside the European Union in times of crisis.

The changes should make it easier for smaller economies outside the EU’s borders — such as Ukraine — to borrow euros from the ECB if they are under financial stress.

“Building on the experience…during the pandemic and Russia’s war in Ukraine, the new framework provides for access conditions to be broadened in times of crisis or when there is a heightened risk of a crisis materialising,” the ECB said.

Existing repurchase-agreement facilities — under which countries borrow euros from the ECB against collateral — with the central banks of Kosovo, Montenegro, San Marino, North Macedonia, Andorra, Albania and Hungary were extended until the end of next year.

Currently such “repo” lines can only be granted to countries that have the potential to impair the ECB’s own policy due to their size, high usage of the euro and financial and economic links to the EU.

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