ECB Agrees to Provide Euro Liquidity to Financial Entities in Hungary
ECB and MNB, which is the central bank of Hungary, have agreed on the setup of a repo line arrangement to provide euro liquidity to Hungarian financial institutions to address possible euro liquidity needs in context of the COVID-19 shock. Under the repo line, MNB will be able to borrow up to EUR 4 billion from ECB and the maximum maturity of each drawing will be three months. The repo arrangement will remain in place until the end of June 2021, unless an extension is decided. Through a repo line, ECB provides euro liquidity to a non-euro area central bank in exchange for adequate euro-denominated collateral. In the recent months, MNB has created an international safety net consisting of bilateral swap and repo agreements, which enables it to increase foreign-currency liquidity with an amount of up to EUR 10 billion within a short time.
Related Link: ECB Press Release
Keywords: Europe, EU, Hungary, Banking, Securities, Repo Line, Repo, COVID-19, Liquidity Risk, MNB, ECB
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