Euroclear slams "reparations loan" idea, demands ironclad guarantees

The Belgian depository Euroclear, which holds most of the frozen Russian assets in Europe, has warned the European Union about the risks of the proposed "reparations loan" mechanism, writes Financial Times.

Euroclear CEO Valerie Urben in a letter to the President of the European Commission Ursula von der Leyen and President of the European Council António Costa wrote that providing aid to Ukraine using Russian assets would be perceived outside the EU as "confiscation." This could frighten investors in European sovereign debt, especially sovereign wealth funds and central banks, who would see it as a violation of the rule of law.

She also pointed out that an obligation to invest Russian money in interest-free special purpose debt instruments would certainly lead to countermeasures from Russia and, potentially, legal claims from which Euroclear must be protected.

Urben expects that the "reparations loan" mechanism will include unconditional guarantees covering the depositary's risks "as long as there remains legal exposure." This includes the risks of retaliation by Russia and other states, liquidity risks, and "any other risks related to the subscription of the instrument ."

• The idea of a "reparations loan" of up to €140 billion, based on the cash balances of Russian frozen assets, was put forward on September 10.
• Thanks to the "reparations loan", Ukraine could receive 45 billion euros annually over the next three years – from 2026 to 2028.
• october 23 EU postpones decision on the "reparations loan" until December.
• This decision determines the adoption of a new loan program between Ukraine and the IMF.