ECB Rejects Role in 140 Billion Euro Loan for Ukraine Backed by Frozen Russian Assets

The European Central Bank has declined to act as a backstop for a proposed 140 billion euro loan for Ukraine, which was intended to be financed using frozen Russian assets in the EU, according to the Financial Times citing unnamed European officials.

The ECB determined that the European Commission’s proposal falls outside its mandate. Officials had inquired whether the central bank could serve as a lender of last resort for Euroclear Bank, the credit branch of Belgium’s central securities depository, to prevent a potential liquidity issue. ECB representatives indicated that such support was not possible.

An internal ECB assessment reportedly concluded that the EC’s plan would effectively amount to direct financing of EU member states, with the central bank covering their obligations. Such actions are prohibited under EU treaties due to the risk of triggering high inflation and undermining confidence in the ECB.

Despite the central bank’s refusal, some European leaders, including German Chancellor Friedrich Merz, have argued that frozen Russian assets represent a legitimate mechanism to support Ukraine. Meanwhile, Moscow has repeatedly warned that it is prepared to respond if the West attempts to seize these assets.