The European Union has yet to reach a final agreement on the mechanism for using hundreds of billions of dollars in frozen assets of the Russian Federation, although these resources could become a key source of funding for aid to Ukraine, particularly for new military support packages from the U.S. Estimates suggest that fully replacing the current military and financial support from Washington would cost approximately 45 billion dollars per year.
This is reported by Business • Media
Mechanisms for using frozen assets
One of the initiatives involves transferring these funds to Ukraine in the form of loans. It is assumed that Russia will only be able to recover this money after compensating for the damages caused by the war. According to calculations, around 524 billion dollars is currently needed for the reconstruction of Ukraine. Thus, the scheme for utilizing about 300 billion dollars in frozen Russian assets could partially cover these needs.
Potential risks for custodians
The CEO of the largest European custodian, Euroclear, Valérie Urban, warns that the EU’s proposal to invest frozen Russian assets in riskier instruments could be equated to expropriation and create significant risks for the custodian itself, which currently holds 191 billion euros in Russian assets. In her opinion, the implementation of such a scheme is only possible with guarantees to cover potential losses.
“In the event of a restitution request from the Central Bank of Russia regarding the missing assets, someone will cover this amount.”