Was thinking yesterday about what a very bad move the stealing of Russian assets will be for the financial system. In the EU, sure, but also globally. – Undermining confidence and banking is very much a confidence game
Financial Post
The European Central Bank has warned that if Europeans appear willing to grab other countries’ money, it could undermine confidence in the euro currency.
Russia’s central bank has filed a lawsuit in Moscow seeking damages from Brussels-based depository Euroclear for freezing its sovereign assets, and vowed to challenge European plans to immobilise the reserves.The central bank said on Friday that Euroclear, which holds €185bn of the €210bn in Russian assets frozen by Europe, had “made it impossible to access funds and securities belonging to the Bank of Russia” through “illegal actions”.
The suit is Russia’s first shot across Europe’s bows as Brussels moves to indefinitely immobilise the assets to fund a €90bn loan to Ukraine next week. Belgium, where most of the assets are held, has opposed the idea, fearing Russian retaliation.
The European Commission believes no courts outside the EU would have jurisdiction over the case. But Russia’s central bank said it would also “unconditionally challenge” efforts to immobilise its assets via international courts in both “friendly and hostile countries”.
What the European Commission believes may be incorrect in reality?
It is seeking damages based on “the sum of the Bank of Russia’s blocked funds, the value of the blocked securities, and loss of expected gains”, the central bank added.
It added that it would pursue “all available legal and other mechanisms to defend its interests” if the European plans to use Russia’s assets move forward. Euroclear declined to comment on the lawsuit.
Kyiv’s western allies froze $300bn in Russia’s reserves shortly after President Vladimir Putin ordered the full-scale invasion of Ukraine in 2022. They are currently immobilised every six months through a process that
requires unanimous agreement from all 27 EU members, including opponents of the scheme such as Hungary.
But the European Commission proposed using emergency powers to immobilise €210bn indefinitely to fund the €90bn loan, hoping it will bolster Kyiv’s resistance to Russia’s invasion and help secure a role for the continent in US-led peace talks.
The move is opposed by the US, which wants most of the assets to be poured into two US-led investment funds as part of draft peace plans that Donald Trump’s administration is currently negotiating between the US and Russia.
Belgium has demanded other member states share the risks of future Russian legal challenges. But France, whose commercial banks hold about €18bn of the Russian assets, has pushed back against the idea.
If you haven’t been following the bouncing ball, check here, here and here for starters