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Europe stands at a pivotal moment as it channels the frozen assets of the Russian central bank toward rebuilding Ukraine. The bloc has preserved close to 200 billion euros held in one of the largest depositories, Euroclear, a consequence of sanctions retaliating against Moscow for the war in Ukraine. This week, the Twenty-Seven began a process to require central securities depositories to separate any extraordinary profits, planning to use those funds to finance reconstruction efforts in Ukraine. The move marks a measured step in leveraging frozen reserves for humanitarian and recovery purposes while balancing broader financial stability concerns across the region.
Early in the conflict, on February 24, 2022, the EU swiftly barred transactions tied to the management of reserves and assets under the Russian central bank. As a result, billions were effectively withheld. Estimates hover around 200 billion euros, with potential totals nearing 300 billion when considering assets held by other major economies. These figures illuminate the immense task of rebuilding a country facing devastation and long-term recovery needs.
Brussels unveiled a December proposal aligned with the G7 consensus. The EU intends to prohibit organizations such as Euroclear from profiting on frozen assets and to set clear future standards. Specifically, central securities depositories with more than one million euros attributed to Russian assets will be required to keep a separate account for extraordinary cash balances generated through sanctions. They must retain the relevant income separately and refrain from converting the resulting net profit into cash for distribution.
Attention
This step lays the groundwork for the Twenty-Seven to decide whether to contribute financially to the European budget through the new Ukraine facility, a framework already supported by a 50 billion euro pledge adopted on February 6. The aim is to strengthen reconstruction across the country. In addition, acknowledging the risks and costs associated with holding the assets and reserves of the Bank of Russia, each central securities depository may seek approval from its supervisory authority to release portions of these net profits to meet legal obligations. The emphasis remains on prudent capital and risk management that safeguards stability across the region.
European ministers welcomed the decision with cautious optimism, while urging rapid and practical measures that support Ukraine. The emphasis is on ambitious actions that advance Ukraine’s reconstruction and resilience. A senior Ukrainian official underscored readiness to collaborate with partners to achieve shared goals, reinforcing the commitment to a constructive international response that aligns with broader security and economic interests.
The ongoing debate over frozen assets has occupied European leadership circles for months. Some concerns centered on the potential impact on the United States and broader global financial stability, as well as confidence in the euro. In response, Brussels has pursued a careful, measured approach. For now, the Twenty-Seven has enacted a law requiring Euroclear to manage and account for profits separately and to prevent distributions of funds from immobilized Russian assets to shareholders or third parties. Any future use of this money will require an additional proposal and approval.
The evolution of the European stance continues with a forthcoming sanctions package. Aimed at expanding the list of affected individuals and entities, the plan also signals attention to other issues, including dual-use products and entities in various regions. The overarching objective remains steady: deter, constrain, and maintain momentum toward Ukraine’s stabilization and future growth while preserving financial safeguards across member states.