ECB eyes new currency safety nets to boost euro's global role

ECB Seeks to Expand Currency Safety Nets, Boosting Euro’s Global Standing

ECB’s Strategy to Strengthen the Euro’s International Role

Plans to Expand Currency Safety Nets

FRANKFURT, Sept 28 (Reuters) - The European Central Bank plans to expand currency safety nets to make it easier for foreign central banks to borrow euros, ECB President Christine Lagarde said on Monday, in a bid to strengthen the single currency's global standing.

The push comes amid concerns over financial fragmentation and growing uncertainty around the future of the US dollar under President Donald Trump.

Enhancing Swap Lines for Crisis Response

Lagarde said the ECB would work on swap lines, which act as a source of emergency liquidity at times of crisis by allowing foreign central banks to borrow euros in exchange for their own currency.

"We will be working on swap lines that will be more responsive to the imperative of having a sovereign euro area and a strong euro," Lagarde told European lawmakers.

Benefits of Swap Lines and Existing Arrangements

Swap lines relieve pressure on foreign borrowers but also prevent stress abroad from spilling over into the euro area. The ECB has such arrangements with the US Federal Reserve and the central banks of Japan, Britain, Canada and Switzerland.

The move is part of an ongoing ECB effort to expand the euro's international footprint.

Repo Facilities and Global Financial Concerns

The ECB has received nearly 30 applications for a separate lending facility - known as repurchase agreements or repo - that allows foreign banks to borrow against euro collateral.

Risks Linked to US Federal Reserve Policies

Central bank officials and investors worry that the US Federal Reserve might eventually cut its own swap lines, which currently serve as the main global lifeline for trillions of dollars in foreign loans.

(Reporting by Francesco Canepa; Editing by Alexandra Hudson)