The term of the 400 million euro loan with the ECB is extended - Bank of Albania: Reserve security in case of financial crises
The European Central Bank (ECB) has extended the term of the Euro-collateralized loan (REPO) with the Bank of Albania until January 31, 2027, with the same conditions as before.
In 2020, the Bank of Albania signed an agreement with the European Central Bank, according to which our Bank would have access to a liquidity line at the unchanged maximum loan value of 400 million euros from the European Bank.
But what does this mean specifically?
If our country's financial system experiences a crisis, the Bank of Albania can borrow 400 million euros from the European Central Bank to cope with the crisis.
If Albania faces liquidity problems, such as a lack of euros in its banking system, it can use this agreement to obtain euros from the European Central Bank.
Repo agreements, also known as repurchase agreements, are agreements where the Bank of Albania, or the central banks of other countries, borrow foreign currency for a specified period in exchange for financial assets that serve as collateral for the European Central Bank. At maturity, the Bank of Albania repays the borrowed currency plus a contractually agreed interest rate.
The ECB offers euros to central banks that are not part of the Eurozone and receives high-quality financial assets in euros as collateral.
Despite the fact that so far, the use of this liquidity line has not been necessary, the Bank of Albania assesses that this reserve instrument remains supportive of the country's monetary and financial stability, in the context of the increased uncertainties resulting from the continuation of the war in Ukraine, or tensions in the Middle East, as well as their potential risks for the global economy and financial markets.
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