The main holder of frozen Russian assets in the West, the Belgian investment fund Euroclear, has objected to the G7 plan to use the money, holding $191 billion of the Russian Central Bank’s 260 frozen assets.
Western governments are known to be drawing up plans to issue debt to finance Ukraine, using Russian assets as a guarantee of debt repayment, which would put Moscow in trouble.
Therefore, the plan is to use these assets as collateral to borrow money and transfer it to Ukraine, whereby they want to force Russia to repay the money and if it refuses, confiscate the assets.
Structuring the support in this way would allow the coalition to raise funds for Ukraine without having to immediately resolve legal questions about other countries’ grounds for seizing Russian sovereign assets.
Even as the White House is pushing its allies to find ways to seize €260 billion of Russian central bank assets that have been immobilised abroad since the Ukraine-Russia conflict began. Some of the €191 billion of Moscow’s assets are held at Euroclear, a Brussels-based securities depository.
However, Paris and Berlin have voiced particular caution as they are concerned about legality, financial stability and possible reprisals, and that such actions could have implications for financial stability.
Euroclear officials said this would pose risks to the European financial system and expose the company to legal action.
“Using assets that do not belong to you as collateral is very close to an indirect seizure or a commitment to a future seizure, which can have exactly the same consequences for the markets as a direct seizure. We can’t imagine how the central Russian bank can simply recognise that everything has been seized and that Euroclear’s obligations to them have ceased to exist,” said Liv Mostry, CEO of the investment fund.
