EU Warned of Risks Over Plan to Leverage Frozen Russian Assets

(MENAFN) Belgian depository Euroclear has cautioned that the EU may encounter higher borrowing expenses and lasting harm to its worldwide standing if it proceeds with its newest initiative to utilize frozen Russian state assets to back fresh loans for Ukraine, according to a media outlet.

The privately held clearing institution currently oversees roughly $200 billion of the $300 billion in Russian Central Bank holdings immobilized in the West following the escalation of the Ukraine conflict in 2022.

EU authorities propose issuing a ‘reparation loan’ to Kiev by employing those reserves as collateral, while Moscow has condemned the idea as outright theft.

The Brussels-supported strategy would be interpreted internationally as “confiscation of central bank reserves, undermining the rule of law” by major investors including sovereign wealth funds and national banks, Euroclear CEO Valerie Urbain warned in a letter cited by the media outlet.

She further indicated that such an action would make European debt seem more hazardous, potentially elevating government borrowing prices across the EU for an extended period, the newspaper noted Thursday.

Urbain has earlier signaled that the privately run Euroclear might pursue legal action against the EU if it attempts to seize the Russian sovereign assets stored within its system.

Efforts to appropriate Russian holdings have escalated as the US advances a new proposal aimed at resolving the Ukraine conflict. US President Donald Trump has voiced confidence that an agreement could be achieved.

European policymakers, however, worry that the American plan could interfere with the bloc’s approach, with a German outlet reporting that it might obligate the EU to compensate for any redirected Russian funds.

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