Explainer
European leaders have a plan to guarantee financial support for Ukraine through Russian assets frozen in the EU space. But what are these assets and what plan is this?
The EU is finalizing its proposal on a reparations loan to Ukraine based on the frozen assets of Russia’s central bank. THEEuropean leaders will debate this Thursday how these assets could be used to meet Kiev’s financial needs.
Zelensky is pleased with the greater pressure on Russia and said he hopes for a “positive decision”, pointing out that Russia is “very afraid” of this measure.
But what Russian assets are these?
Like other central banks, the Central Bank of Russia has part of its gold and foreign exchange reserves in liquid assets such as major currencies, gold and government bonds. About half of these assets were in the West at the time they were frozen.
It is recalled that after Moscow advanced the large-scale invasion of Ukraine, the international community banned all transactions involving the assets and reserves of the Central Bank of Russia. Consequently, 260 billion euros of these assets were “frozen”, with more than two thirds (around 210 billion euros) in the EU.
Many of these have already expired and have become money held by Euroclear, the Belgian entity responsible for the conservation of securities.
As the European Parliament website explains, “dDepending on interest rates, revenue from these fixed assets can amount to three billion euros per year.”
The Central Bank of Russia did not detail exactly what type of assets were frozen, but some data from the beginning of 2022 offer clues, as detailed by Reuters.
Of these assets, the Russian central bank held about $207 billion in euro assets, $67 billion in US dollar assets and $37 billion in sterling assets. There were also assets in Japanese yen, Canadian dollars, Australian dollars, Singapore dollars and Swiss francs.
What’s the plan?
The European Union’s plan involves using frozen Russian assets to finance a “reparation loan” to Ukraine. The initiative would unlock 185 billion euros from the Central Bank of Russia (part of the assets that are frozen), but the assets would not be affected and Ukraine would only return the loan when Russia compensated Kiev for the destruction caused over the three and a half years of war.
The initiative would involve replacing Russian assets with debt securities (bonds) issued by the European Commission. The mechanism could be created and supported by a “coalition of volunteers”, not needing all 27 EU countries. This is a way to circumvent any potential veto from Hungary, which has closer relations with Moscow.
So far, the EU has used interest on assets to repay a $50 billion loan to Ukraine, but the amount of interest generated is decreasing.
Euroclear said it had 194 billion euros on sanctioned Russian assets registered on June 30, which generated 2.7 billion euros in interest in the first half of 2025, a drop compared to the 3.4 billion euros in interest generated by 173 billion in Russian assets in the same period of 2024.
The “reparations loan”, announced by Ursula Von Der Leyen, President of the European Commission, could generate around 39 billion euros per year for Ukraine between 2026 and 2028.
Does Plano have legs to walk?
European leaders are discussing this possibility, but there are warnings to take into account.
There are bank employees who warn that, if the plan goes ahead, it will create a precedent for the seizure of sovereign assets that could harm foreign confidence in investing in Western government bonds.
Belgium warned that the seizure of assets could expose Euroclear to litigation. Furthermore: he fears that he will be at a loss if Russia decides, for example, to demand his money when the sanctions are lifted. This, he warns, could trigger a financial crisis.
Despite these hesitations, most EU countries say they are ready to offer guarantees to share the risk.
What exactly would the money be used for?
Countries have different ideas about how Ukraine should use this money. Germany argues that this amount should be used to exclusively finance the defense of Ukraine and France, for example, considers that the money should be used to buy European weapons, instead of foreign-made equipment.
Sweden, the Netherlands and allies in Central and Eastern Europe prefer to give Ukraine freedom to determine how to spend the money as it is in the best position to do so.
Russia is not happy with the possibility
As this hypothesis gained strength, Russian authorities threatened possible consequences if the plan went ahead. Russia even guaranteed that it would go after any state that tries to take its assets.
Maria Zakharova, spokesperson for the Ministry of NegRussian Foreign Affairs warned a week ago that the global financial system would “feel the consequences” of any action that seized Russian assets.
Russian state news agency RIA has already warned that billions of euros in foreign investment would be at risk if the West took this decision.
