Amid geopolitical tensions and the proposed sanctions measures by the G7, the question of using frozen Russian assets to support Ukraine is sparking discussion within the international community. However, Euroclear, one of the leading international depositories, expresses serious concerns about this idea, pointing out potential risks to financial stability in Europe.
In an interview with the Financial Times, Euroclear’s executive director, Liv Mostre, stated that the plan to use frozen Russian assets as collateral for issuing debt obligations for Ukraine could be “quite close to indirect asset seizure.” According to her, this poses serious risks for the company and may result in legal actions.
Euroclear, holding around €191 billion belonging to the Russian central bank, and the majority of €260 billion in sovereign assets immobilized abroad following Russia’s invasion of Ukraine, believes that using these assets as collateral could have a negative impact on financial markets and threaten their stability.
“Using assets that do not belong to you as collateral is very similar to indirect arrest or commitment to future arrest, which can have the same impact on markets as direct arrest,” emphasised Mostre.
Despite this, Mostre expressed support for certain EU plans to use profits obtained from frozen assets to provide assistance to Ukraine. She considers this step less risky, stating that the profits “legally belong to Euroclear,” making their use less legally contentious.
Proposals under consideration regarding the use of frozen Russian assets to support Ukraine continue to provoke sharp debates internationally.
As Euroclear notes, such actions could have far-reaching consequences for the financial system and international relations as a whole.
Further negotiations and discussions are expected to help find a compromise solution that takes into account the interests of all parties and promotes the preservation of financial stability in the region.
Image: By Adrian Grycuk – Own work, CC BY-SA 3.0 pl, https://commons.wikimedia.org/w/index.php?curid=59554614
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