The European Central Bank (ECB) has refused to provide guarantees for a €140 billion loan for Ukraine that would have been backed by frozen Russian assets.
Frankfurt determined that the European Commission’s proposal violates the ECB’s mandate.
Brussels officials had requested that the ECB act as the lender of last resort for Euroclear Bank, a branch of the Belgian central depository, to prevent a potential liquidity crisis. However, the ECB stated that this is not permissible.
Internal analysis by the ECB indicates that the initiative would be considered direct government financing, which is prohibited under European treaties, as it could increase inflation and undermine the institution’s credibility.
Meanwhile, Russian Foreign Ministry spokesperson Maria Zakharova warned that Moscow would respond “very harshly and painfully” if frozen Russian assets were used to fund a “compensation loan” for Ukraine.
