The European Commission has proposed using the frozen funds to guarantee loans to Kiev
Any EU move to use frozen Russian state assets to support Ukraine must comply with international law, European Central Bank President Christine Lagarde said on Monday, adding that the institution was following the process closely.
The comment comes as EU nations’ leaders are discussing a plan to provide Kiev with a €140 billion ($164 billion) loan backed by Russia’s immobilized central bank assets.
The scheme, designed to avoid the legal hurdle of outright confiscation, would invest the blocked Russian funds into EU-backed bonds. The proceeds would then be used to pay off a “reparations loan” to Ukraine.
“We very much expect that any scheme that is discussed and eventually introduced at some point in time will be done in accordance with international rules, with international law,” Lagarde told a parliamentary hearing in Strasbourg, according to Reuters.
The ECB chief has expressed concern that a legally contentious move could undermine the euro’s credibility, deter investment in euro-denominated assets, and pose a risk to financial stability.
“From my vantage point, and with in mind financial stability and the strength of the euro, we will be looking very attentively to make sure that what is proposed is in accordance with international law (and) is mindful of financial stability,” Lagarde said.
Proceeds from matured bonds, in which frozen Russian assets were invested following the 2022 escalation of the Ukraine conflict, are now held at Belgium’s Euroclear.
The depository holds approximately two-thirds of the $300 billion in Russian sovereign assets immobilized by Western nations. Lagarde has warned that any further action requires consensus among all jurisdictions holding such assets.
The EU has transferred over a billion from interest to Kiev so far. Some of the bloc’s members, however, continue to voice concerns about the legal risks associated with such a step.
Last week, Belgian Prime Minister Bart De Wever said his country would not agree to an EU plan that leverages frozen Russian central bank assets to fund loans for Ukraine without firm guarantees of shared financial responsibility.
French President Emmanuel Macron said last month that central bank assets cannot be seized without harming “credibility,” while Kremlin spokesperson Dmitry Peskov called the EU plan “theft” and warned those responsible “will be subjected to legal prosecution.”
