The European Central Bank and the Croatian National Bank have agreed to extend the euro liquidity line until the end of March 2022. The swap line agreement allows the CNB to borrow up to EUR 2bn from the ECB in exchange for the kuna.
The liquidity lines were established in 2020 to provide euro liquidity to financial institutions through national central banks. The main objective of these lines is to address possible euro liquidity needs in non-euro area countries in the presence of market dysfunctions due to the COVID-19 pandemic. Furthermore, they aim at ensuring a smooth transmission of ECB monetary policy by preventing potential spillback effects on euro area financial markets and economies. The euro liquidity line with the CNB had been initially set to expire by the end of 2020 and was later extended until the end of June 2021.