Since the ECB only has domestic counterparties in its refinancing operations, it is essential to complement the domestic liquidity framework with international liquidity lines. These lines, which consist of both repo and swap lines, mitigate adverse spillovers in the event of increased demand for euro liquidity abroad and/or impairment in cross-border euro liquidity flows. In the absence of international liquidity provision, such shocks might exert upward pressure on euro money market rates or disrupt the functioning of securities markets and the banking system, and thereby impair monetary policy transmission.
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