The EU Council announced the new decision on the liabilities of the central depository institutions holding the reserves of the Central Bank of Russia, which were frozen due to the restrictive measures of member countries towards Russia.
The statement recalled that with the start of the Russia-Ukraine war, the EU, together with international partners, decided to ban all transactions related to the management of the Russian Central Bank’s reserves.
According to the statement, which recalled that Russian assets held by financial institutions in the EU and member countries were frozen as a result of the ban, the latest decision introduced new rules for the income that central securities depositories receive in connection with the Achieve ban on retention of frozen assets.
According to the statement, it was decided that depository banks, especially those with Russian Central Bank assets exceeding 1 million euros, should separately record extraordinary cash balances accumulated due to EU sanctions and keep the corresponding income separately.
According to the statement, it was noted that the custodians are prohibited from disposing of the net profits they received from Russian assets, and the decision made paved the way for the net profits from Russian assets to become a possible financial contribution could afford The EU budget should support the reconstruction of Ukraine in the next phase.
About the process
EU countries have frozen around 200 billion euros from the Russian central bank due to the war. Financial institutions that hold Russian assets make significant profits by reinvesting them as they mature.
Union representatives have been discussing for months the legal and financial aspects of frozen assets and the use of income from those assets without the owner’s consent.
The EU wants to target the income from this and not the main money.
The Commission’s proposal on this issue in December envisages paying income from Russian assets into a separate account.
As a second step, the EU Commission plans to draw up a proposal that would first transfer these funds to its own budget and then to Ukraine.
€180 billion of Russia’s central bank reserves frozen by the EU are held by Euroclear, a Belgium-based securities clearing and custody service provider. So while the assets on the institution’s balance sheet are increasing rapidly, Euroclear is generating high interest income. Euroclear earned more than 3 billion euros last year from interest on Russian assets frozen due to EU sanctions.
The European Central Bank (ECB) warned the EU Commission in June last year about the frozen assets of the Central Bank of Russia.
The ECB drew attention to the sensitivity that confiscating Russian assets or their earnings could harm the euro’s position as a global currency and financial stability.
The ECB noted that other central banks with large foreign exchange reserves may leave the euro, especially if the EU acts unilaterally, saying that euro-denominated assets may be withdrawn and European countries’ financing costs could rise.