ECB refuses to back Ukraine's reparation loan using Russian assets — FT
Illustrative photo: European Central Bank (Getty Images)
The European Central Bank has refused to support the idea of a so-called reparation loan for Ukraine worth €140 billion, according to the Financial Times.
According to journalists, European officials asked the ECB to act as a lender to the Belgian depository Euroclear, where part of the frozen Russian reserves are stored.
The plan envisaged that the ECB would act as the lender of last resort for Euroclear and provide guarantees for the liquidity of the mechanism. The idea was that these funds could be used to finance Ukraine's needs after Russia's invasion.
However, according to the publication's sources, the ECB concluded that such a scheme was beyond its mandate, as under EU treaties, central banks are not allowed to directly finance government spending or act as guarantors for such loans.
There is currently no official confirmation of this information.
In view of the ECB's decision, EU leaders have begun discussing other mechanisms for financing Ukraine, including possible alternatives to a reparations loan or new legal formulas that would allow legal obstacles to be circumvented.
The total amount of frozen assets of the Central Bank of Russia in Western countries is about €260 billion, of which €193 billion is held in Euroclear accounts in Belgium. The issue of using these funds to support Ukraine has been discussed in the EU for almost four years, but there is still no clear agreement.
Belgian Prime Minister Bart De Wever believes that the EU's proposal to use frozen Russian assets to finance Ukraine could have serious economic and geopolitical consequences.
Thus, European countries are developing a plan B in case they cannot agree on the use of Russia's frozen assets to provide reparations loans to Ukraine.
