Belgian securities depository Euroclear has cautioned that the EU’s proposal to back a €140 billion loan for Ukraine with frozen Russian assets could be seen as “confiscation” and might drive up sovereign borrowing costs, the Financial Times reports. Euroclear, which holds roughly €185 billion of Russian assets immobilized in Belgium, said the scheme risks legal challenges, retaliation, and a negative impact on Europe’s investment climate. The plan, supported by European Commission President Ursula von der Leyen, is intended to bolster Ukraine’s financing, but Belgium and Euroclear are urging safeguards to limit financial fallout for member states.
Why It Matters
If perceived as expropriation, using frozen Russian assets could set a contentious precedent for cross-border sovereign debt, potentially increasing spreads on EU bonds and undermining investor confidence. Legal and financial backlash could complicate Europe’s efforts to support Ukraine without jeopardizing its own fiscal stability.
Euroclear is the custodian of most of the frozen Russian assets and seeks protection against legal or financial repercussions. Belgium, hosting Euroclear, is concerned about being left exposed. Other EU member states, the European Commission, and financial markets all have a stake in ensuring the loan scheme succeeds without triggering wider market instability. Ukraine is the intended beneficiary of the funding, while Russia is likely to object if assets are repurposed.
What’s Next
The European Commission may present a legal framework to address these concerns, including guarantees for Belgium and Euroclear. Officials aim to resolve member-state objections ahead of implementing the loan, but potential legal challenges and market reactions will remain key risks to watch.
With information from Reuters.
