The head of Euroclear spoke out against the confiscation of Russian assets

The confiscation of Russian assets frozen in the European Union would have a profoundly negative impact on the European financial system and would prompt the departure of a significant number of international investors, according to Valerie Urbain, the newly appointed head of Euroclear, one of the world's largest settlement and clearing systems based in Belgium. In an interview with the Belgian publication Echo, Urbain highlighted the potential consequences of such a move.

"This is a matter of legal security." Such a decision would have extremely negative consequences not only for Euroclear, but also for our financial markets as a whole. If our clients believe that the rules are no longer being followed and that their assets may be seized, this could have serious implications. "This could result in significant international investors divesting from Europe." Urbain added:
Despite calls to confiscate Russian assets in the EU, the focus currently is on practical matters such as the use of the proceeds from these assets.

In February of this year, the Council of the European Union approved a decision on income from Russian assets frozen in the EU. This decision was made to account for these assets separately and store them in special accounts. It is not within the discretion of depositories to use these assets.
At the end of March, the European Commission and the head of European diplomacy, Josep Borrell, presented to the EU countries their proposal to use the proceeds from the frozen assets of the Russian Central Bank for military assistance to Ukraine (approximately 3 billion euros per year). In particular, in 2024, the European Commission plans to spend 90% of the revenue received on arms supplies to Kyiv. The European Commission has scheduled the initial transactions involving Russian funds for military assistance to Ukraine for the summer.

Following the commencement of the special operation in Ukraine, the EU and G7 countries collectively froze approximately half of Russia's foreign exchange reserves, amounting to approximately 300 billion euros. Approximately 200 billion euros are held in the EU, primarily in the accounts of Belgium's Euroclear. Initially, the EU discussed the possibility of using the frozen assets of the Russian Federation to finance the reconstruction of Ukraine.

The European Central Bank has warned that this could have a negative impact on the reputation of the European currency in the long term. It has called for a more holistic approach to financing Kyiv, beyond the isolated conflict.