In China, ECB makes case for euro liquidity lines

FRANKFURT, Oct 21 (Reuters) - The European Central Bank can strengthen the euro's global role and amplify the reach of its monetary policy by providing liquidity safety nets to foreign countries, ECB chief economist Philip Lane said on Wednesday.

Speaking at a closed-door event in Shanghai titled "Monetary System Beyond the Dollar", Lane said demand for the ECB's recently expanded euro liquidity facilities had been strong, with more than 30 central banks expressing interest.

"Liquidity lines bolster confidence in the currency and reduce the associated risks, supporting its wider usage," he told the event, part of the annual Bund summit, according to prepared remarks. 

The comments come as policymakers globally question the the long-term dominance of the dollar in light of US President Donald Trump's unpredictable economic policy.

Lane argued that greater international use of the euro would enhance the ECB's ability to deliver on its inflation mandate by extending the global impact of euro area monetary policy.

He said the ECB's EUREP facility, which allows foreign central banks to obtain euros against collateral denominated in the single currency, could boost bond markets in the 21-country bloc, particularly through increased purchases by official reserve managers.

ECB President Christine Lagarde said recently that the bank was also reviewing its network of currency swap lines, which allow major central banks, including the US Federal Reserve and the People's Bank of China, to exchange their own currencies for euros. 

Lane said such arrangements can encourage borrowing in euros but should be reserved for central banks in economies with close financial links to the euro area and a clear capacity to repay euro liabilities.

(Reporting by Francesco Canepa; Editing by Jonathan Spicer )