Hungary's seizure of Ukraine funds poses risk to euro — ECB
Photo: Hungary's seizure of cash destined for Ukraine risks undermining confidence in the euro (facebook.com/oschadbank)
The European Central Bank (ECB) has warned that Hungary’s seizure of a vehicle carrying cash en route from Austria to Ukraine risks undermining confidence in the euro, according to the Financial Times.
The National Bank of Ukraine (NBU) raised the issue of currency seizures in Hungary with the ECB after Hungary stopped vehicles and confiscated $40 million, €35 million, and 9 kg of gold earlier this month.
ECB President Christine Lagarde shares the NBU’s assessment and clearly emphasized the risks this situation poses to the euro’s status as an international currency, says a spokesperson for the financial institution, adding that Lagarde will raise this issue directly with authorities in Budapest and Brussels.
For the ECB, this incident touches on a sensitive issue: confidence in the euro as a global currency also depends on the smooth functioning of financial infrastructure and legal certainty in all member states.
By linking the incident to the euro’s status on the international stage, the ECB is presenting it as a systemic problem for the bloc.
Background
On March 5, Hungarian law enforcement stopped a convoy of Oschadbank vehicles transporting gold, as well as tens of millions of dollars and euros, from Vienna to Ukraine. The Hungarian side seized the funds, citing suspicions of money laundering.
During the raid, Hungarian law enforcement damaged the bank’s armored vehicles, and some of the gold bars went missing. The Ukrainian side accused Hungarian law enforcement of incompetence and intentional property damage.
According to The Guardian, the detainees may have been subjected to forced injections of an unknown substance, similar to truth serum, to coerce them into testifying. One of the victims subsequently suffered a hypertensive crisis and lost consciousness.
Subsequently, Yurii Katsion, chairman of the board of Oschadbank, stated that the bank had suspended the import of cash following the incident involving the detention of Ukrainian cash transporters in Hungary.
