ECB Euro Liquidity Lines

The use of central bank liquidity lines has gained momentum since the global financial crisis in order to provide foreign exchange markets, while at same time preventing threats stability and negative spillbacks. US dollar swap are well studied, but much less is known about effects euros. We a difference-in-differences strategy show that announcement ECB euro direct positive signalling effect premium paid by agents borrow euros FX markets decreases up 76 basis points relative currencies not covered these facilities. Additionally, paper provides suggestive evidence facilities generate spillbacks area domestic equity prices increase 6.7% countries highly exposed via banking linkages whose targeted lines.