The ECB has refused to backstop a \u20ac140 billion loan to Ukraine using frozen Russian funds, the FT has reported<\/p>\n
The European Central Bank has refused to support a proposed \u20ac140 billion payout to Ukraine backed by frozen Russian assets held at Belgium\u2019s Euroclear, the Financial Times reported on Tuesday, citing officials familiar with the discussions.
\nThe ECB determined that the European Commission\u2019s scheme falls outside its mandate, the newspaper reported.
\nThe EU has spent months trying to tap frozen Russian central bank reserves to back a \u20ac140 billion ($160 billion) \u201creparations loan\u201d for Kiev. Belgium, where around $200 billion of the assets is held at the privately owned Euroclear clearing house, has repeatedly warned of potential litigation as well as financial risks if the EU goes through with the scheme.
\nUnder the European Commission\u2019s plan, EU nations\u2019 governments would provide state guarantees to share the repayment risk on the loan for Ukraine.<\/p>\n
Read more<\/p>\n
Belgium delivers resolute \u2018no\u2019 to proposed theft of Russian assets<\/p>\n
Commission officials, however, have warned that member states might be unable to mobilize cash quickly in an emergency, risking market strains.
\nEU officials reportedly asked the ECB whether it could act as a lender of last resort to Euroclear Bank, the Belgian depository\u2019s lending arm, to prevent a liquidity crunch. ECB officials told the commission this was not possible, the FT reported, citing sources familiar with the talks.
\n\u201cSuch a proposal is not under consideration as it would likely violate EU treaty law prohibiting monetary financing,\u201d the ECB said.\u00a0
\nBrussels is now reportedly working on alternative ways to provide temporary liquidity to backstop the \u20ac140 billion loan.
\n\u201cEnsuring the necessary liquidity for possible obligations to return the assets to the Russian central bank is an important part of a possible reparations loan,\u201d the FT quoted an EC spokesperson as saying.\u00a0<\/p>\n
Read more<\/p>\n
Euroclear issues stark warning to EU over Russian assets plot \u2013 FT<\/p>\n
Euroclear CEO Valerie Urbain warned last week the move would be seen globally as \u201cconfiscation of central bank reserves, undermining the rule of law.\u201d Moscow has repeatedly warned it would view any use of its sovereign assets as \u201ctheft\u201d and respond with countermeasures.\u00a0
\nThe push comes as the cash-strapped EU faces pressure to finance Ukraine for the next two years amid Kiev\u2019s cash crunch, with efforts to tap Russia\u2019s assets intensifying as the US promotes a new initiative to settle the conflict. Economists estimate Ukraine is facing a budget gap of about $53 billion a year in 2025-2028, excluding additional military funding.\u00a0
\nThe country\u2019s public and government-guaranteed debt ballooned to unseen levels of over $191 billion as of September, the Finance Ministry said. The IMF last month raised its debt forecasts for Ukraine, now predicting public debt at 108.6% of GDP.<\/p>\n","protected":false},"excerpt":{"rendered":"
The ECB has refused to backstop a \u20ac140 billion loan to Ukraine using frozen Russian funds, the FT has reported The European Central Bank has refused to support a proposed…<\/p>\n","protected":false},"author":1,"featured_media":23519,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[4,6,3],"tags":[],"class_list":["post-23518","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-environment","category-politics"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t