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Euroclear CEO opposes plan to use frozen Russian assets as collateral for Ukraine debt

Photo by Euroclear

A plan to use frozen Russian assets as collateral to issue debt for Ukraine would amount to an indirect seizure and would post financial stability risks to Europe, said the CEO of Belgian central securities depository Euroclear.

CEO Lieve Mostrey said the plan would also make way for legal claims by the Russian central bank against Euroclear, which holds some about €190 billion of the €260 billion in sovereign Russian assets seized after the invasion of Ukraine.

“Using assets that don’t belong to you as collateral is pretty close to an indirect seizing or a commitment to future seizing, which could have exactly the same effects on the markets as a direct seizing,” Mostrey told the newspaper in an interview.

“I trust that the prudent, rational will prevail,” Mostrey said. “When we come to a logic of seizing of assets . . . then you see the trust in the Euroclear system, the trust in the European capital markets, the trust in euro as a currency substantially affected.”

The plan to use frozen Russian wealth as collateral to issue debt for Ukraine is one of several plans proposed for the assets.

Some in the US have been pushing for outright seizure of the assets, but many European counterparts say such a measure could encourage sovereign investors and others to stay away from holding their capital in Western nations.

Instead, Europeans have proposed transferring profits generated on those frozen assets to Ukraine or the issuance of debt using the assets as collateral.

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