The head of the ECB is against the confiscation of Russian assets to help Kyiv

European Central Bank President Christine Lagarde said that all proposals to transfer Russian frozen assets to finance military aid to Ukraine have legal risks.

In her opinion, the transition from freezing assets to confiscation and subsequent disposal of them could cause “a violation of the international order that you want to protect; which you would like Russia to respect.” quotes Lagarde The Financial Times.

The acceleration of confiscation proceedings “raises a whole range of other issues” that relate to international law and order, financial stability and accountability, Lagarde added. She also pointed to the “huge asymmetry” in the allocation of Russian assets: over two hundred billion euros are frozen in the eurozone, and only six billion in the United States. In addition, the euro has a weaker position compared to the dollar in international finance, the head of the European Central Bank noted.

The United States is exploring several options for using frozen Russian assets – from complete confiscation to issuing bonds that would allow Ukraine to transfer multibillion-dollar income from Russian funds over several years at once. Washington estimates that such bonds could bring in 30–40 billion euros over the next ten years and 50–60 billion over 15–20 years.

EU countries would prefer to give Kyiv only the profits received from the underlying assets. Such a measure will allow Ukraine to allocate about three billion euros annually. This proposal was discussed at the last EU summit in March. However, no final decision was made.

The issue of using Russian reserves to provide military assistance to Kyiv has become more pressing in recent months, as the war enters its third year and additional US aid to Ukraine is delayed in Congress.

Meeting in Washington yesterday, G7 finance ministers and central bank governors vowed to continue working on “all possible ways” to use frozen Russian assets. reports Reuters.

US Treasury Deputy Secretary Wally Adeyemo said G7 finance ministers are conducting technical work to identify options to create a strong legal basis for outright asset seizure.

“We are looking at several different options. One is seizure and the other is providing collateral or even using windfall profits or interest on those assets to finance the loan,” Adeyemo said.

Possible options are expected to be presented to G7 leaders at a summit in Italy in June.

• In response to the full-scale Russian invasion of Ukraine in February 2022, Western countries froze approximately $300 billion of Russian Central Bank reserves. Moscow cannot use either the assets or the interest earned.
• Discussions over whether it is possible to confiscate the frozen assets of the Russian Central Bank without undermining confidence in the international financial system have been going on for more than a year.
• Moscow earlier statedthat in response to the freezing or confiscation of Russian assets abroad, it could take similar steps against the assets of “unfriendly countries” in Russia, which it estimates to be at least $288 billion.