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ECB renews liquidity swap arrangement with BoE

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(FRANKFURT) - The European Central Bank said Monday it has renewed its liquidity swap arrangement with the Bank of England by a further year until September 2014.

"The Bank of England and European Central Bank are today announcing an extension of their temporary reciprocal swap agreement to September 30, 2014," the two central banks said in a statement.

"The swap line was established in December 2010 to enable the ECB to provide sterling liquidity to its counterparties, and was extended for a further year in each of September 2011 and September 2012.

"If requested, the Bank of England will provide the ECB with sterling in exchange for euro up to a limit of GBP 10 billion," it said.

Given the confidence crisis in the eurozone, some banks in the region found it difficult to borrow foreign currency via the markets.

Liquidity swap arrangements were put in place to help alleviate this.

The ECB has similar arrangements with the US Federal Reserve, the Bank of Canada, the Swiss National Bank and the Bank of Japan.

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