Arya News - MOSCOW (Sputnik) - The European Central Bank (ECB) has rejected the European Commission’s (EC) request to provide liquidity to guarantee a loan to Ukraine using frozen Russian assets, the Financial Times newspaper reported on Tuesday, citing multiple officials.
According to the report, EC officials asked the ECB to act as a lender of last resort for the Euroclear settlement and clearing system to prevent a liquidity crisis while facilitating the loan to Ukraine. The ECB’s internal analysis found the commission’s proposal amounted to direct financing of governments, since the central bank would assume the financial obligations of member states jointly guaranteeing the loan repayment under Brussels’ plan, the report said. Providing such funds by central banks is prohibited under the Treaty on European Union, it added. Following the ECB’s refusal, the commission started developing alternative measures to temporarily secure liquidity for an over $162 billion loan, the newspaper reported. The European Commission has been seeking to get the EU countries to use frozen Russian assets to finance Ukraine. On November 8, Belgian news agency Belga reported that the amount involved stands at around $162 billion in the form of a "reparation loan," which Ukraine will conditionally have to repay after the end of the conflict and in case of "compensation for material damage from Moscow." Following the start of Russia"s military operation in Ukraine in 2022, the EU and the G7 froze nearly half of Russia"s foreign currency reserves, totaling approximately $348 billion. Around $232 billion are held in European accounts, predominantly at Belgium"s Euroclear. On November 27, Russian President Vladimir Putin said that the confiscation of immobilized Russian assets would be considered as theft of property and undermine confidence in the eurozone.