EU backing off seizure of Russian assets – Bloomberg

EU authorities see no legal avenues for confiscating frozen Russian central bank assets and are instead planning to use the profits the funds generate, Bloomberg reported on Wednesday, citing a document.

Lawmakers from across the block have been debating the legality of expropriating more than €200 billion ($219 billion) in frozen Russian holdings and channeling them to Ukraine.

The lion’s share of the seized funds are at settlement giant Euroclear, where they have reportedly generated around €750 million during the first quarter of the year.

According to the document cited by Bloomberg, members of the EU working group see “no credible legal avenue allowing for the confiscation of frozen or immobilized assets on the sole basis of these assets being under EU restrictive measures.” Instead, the lawmakers favor using windfall profits from the investments to help Ukraine.

Brussels is expected to seek a mandate to work on this policy from EU leaders during a meeting scheduled for next week.

Several banking giants have raised concerns that expropriating Russian funds could cause Moscow to retaliate against their remaining interests there, people familiar with the matter told Bloomberg.

The European Central Bank has also warned that using interest rate proceeds from the assets could encourage official reserve holders to turn their back on the euro, the document obtained by Bloomberg shows.

The EU froze Russia’s central bank holdings soon after the start of Moscow’s military operation in Ukraine late last February. The Kremlin has condemned Brussels’ action as theft.

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