ECB's Lane Touts Euro Liquidity Lines to Expand Currency's Global Role

European Central Bank chief economist Philip Lane said the ECB can strengthen the euro's global role and extend the reach of its monetary policy by offering liquidity safety nets to foreign countries, speaking Wednesday at a closed-door event in Shanghai titled "Monetary System Beyond the Dollar." Lane said demand for the ECB's recently expanded euro liquidity facilities has been strong, with more than 30 central banks expressing interest. "Liquidity lines bolster confidence in the currency and reduce the associated risks, supporting its wider usage," he said, according to prepared remarks. He argued greater international use of the euro would enhance the ECB's ability to meet its inflation mandate. Lane said the EUREP facility, which lets foreign central banks obtain euros against euro-denominated collateral, could boost bond markets in the 21-country bloc through increased purchases by official reserve managers. ECB President Christine Lagarde has said the bank is also reviewing its currency swap line network. Lane said such arrangements should be reserved for central banks with close financial links to the euro area and clear capacity to repay euro liabilities.