EU to use Russia's frozen assets

European Commission Vice President Věra Jourová made statements regarding Russia's assets frozen due to the war during a press conference held in Strasbourg.

"The European Commission has adopted proposals regarding the immobilization of unexpected extraordinary revenues generated from Russian Central Bank assets," said Jourová, noting that the proposal must be approved by EU countries to enter into force.

Details not shared

Jourová recalled that at the EU Leaders' Summit held in October, the Commission was instructed to accelerate work regarding Russian assets.

The details of the proposal, which must be approved unanimously by EU countries, have not yet been officially shared.

For months, EU officials have been debating the legal and financial dimensions of using frozen assets and the income generated from them without the owner's consent.

Approximately 200 billion euros frozen

EU countries have frozen approximately 200 billion euros of the Russian Central Bank due to the war. Financial institutions holding Russian assets generate significant earnings by reinvesting them as they mature.

The EU wants to target the income generated from these assets rather than the principal. The Commission's proposal includes depositing the income generated from Russian assets into a separate account.

Funds to be transferred to Ukraine

If EU countries accept this proposal, the second phase involves the European Commission planning to transfer these funds first to its own budget and then to Ukraine.

The majority of the Russian Central Bank reserves frozen by the EU are held at Euroclear, a Belgium-based securities settlement and custody services provider.

Approximately 180 billion euros of the Russian Central Bank are held in Euroclear's accounts. As a result, while the assets on the institution's balance sheet are increasing rapidly, Euroclear is generating a large amount of interest income. Euroclear had announced that it generated 3 billion euros in income from the interest on Russian assets frozen due to EU sanctions in the first 9 months of this year.

The European Central Bank (ECB), on the other hand, had warned the European Commission in June regarding the frozen assets of the Russian Central Bank.

The ECB had drawn attention to the sensitivity that seizing Russian assets or their income could harm the euro's position as a global currency and financial stability.

Pointing out that other central banks with large amounts of foreign exchange reserves might exit the euro, especially if the EU acts unilaterally, the ECB had stated that there could be a move away from euro-denominated assets and that the financing costs of European countries could rise.

News Source: 12punto