ECB Could Activate Swap Lines in Case of Brexit, Rimsevics Says

  • Standing swap agreement available if U.K. banks need euros
  • Britain will decide on June 23 whether to remain in the EU

The European Central Bank is ready to offer euro liquidity via its existing swap agreements if the U.K. votes to leave the European Union, Governing Council member Ilmars Rimsevics said.

“Life won’t change much after the referendum -- these agreements and contracts will still be in force,” Rimsevics, who heads Latvia’s central bank, told reporters in Riga on Friday. “If they’ll be needed and there is some sort of shock, then of course these lines will work.”

The ECB, Bank of England and four other central banks agreed in October 2013 to convert their temporary bilateral liquidity swap agreements to standing arrangements, which could be deployed to ease strains in financial markets and prevent their negative spillover effects on economies.

The U.K.’s June 23 vote poses a risk to the euro-area economy and the ECB is ready to handle any outcome, President Mario Draghi said earlier this month. Opinion polls show the outcome of the referendum as too close to call.

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