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Thursday, June 13, 2024

The European Union (EU) is getting closer to reaching for frozen Russian assets

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Germany is ready to support a new US plan to use frozen Russian assets, Bloomberg reported. She added that dwindling cash reserves in the European Union and the uncertain outcome of the American elections make an agreement on this matter closer.

A three-day meeting of finance ministers of the G7 countries will begin on Thursday Italythat hold the presidency in this format of strong and democratic world economies. The topic of the meeting will be the latest proposal USA regarding use of frozen, mainly in the EU, assets of the Central Bank Russia.

The EU and the takeover of frozen Russian assets

So far, European capitals have given the green light for the handover Ukraine profits from the frozen Russian funds, but did not decide to use the assets themselves. Meanwhile, around €210 billion of the €260 billion is held in the EU, most of which is held by financial services company Euroclear with Belgium.

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Washington has been pushing for months to transfer frozen Russian assets to Kiev. The latest idea, however, is more moderate.

“Governments led by France and Germany have expressed concerns about the impact such moves could have on financial stability and the attractiveness of the euro as a reserve currency, as well as its legality,” Bloomberg wrote.

According to the agency, the latest US proposal was received more positively by EU capitals, including Berlin, because it only assumes taking over the future interest generated by the assets without seizing the capital itself.

EU countries have already agreed to use this revenue stream and transfer it to Ukraine. However, the American proposal assumes taking advantage of the potential profits that Russian assets will generate in the future. According to Washington's estimates, it will amount to approximately EUR 5 billion per year. The G7 would agree to set an amount and make it available to Ukraine in advance. The G7 would replace the EU solution by increasing the amount of cash transferred to Kiev.

The final amount of support will depend on the length of the repayment terms and the time the assets are immobilized. The US assumed that it could bring up to EUR 50 billion.

The meeting of finance ministers will probably not bring a breakthrough. A potential agreement is expected to be reached at the G7 summit on June 13-15.

Main photo source: Shutterstock

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