Russia's Frozen Assets of 279 Trillion Won Held
1.0438 Trillion Won Interest Income in Q1 This Year
Belgium Supports Ukraine with Tax Revenue as Well
The European Union (EU) is reportedly discussing a plan to support Ukraine using interest income generated from frozen Russian assets.
On the 24th (local time), major foreign media reported that the day before, EU member states and the European Commission met to discuss ways to utilize the frozen Russian assets held at Euroclear.
Euroclear is an institution that provides cross-border trading and settlement services for government bonds and derivatives, headquartered in Belgium. Currently, it holds Russian assets worth 196.6 billion euros (279.5769 trillion KRW). Of this, 180 billion euros are assets of the Russian Central Bank. Due to international sanctions, the account of Russia's clearing institution, the National Settlement Depository (NSD), has been frozen, leaving these assets currently held at Euroclear.
Interest income is generated from the Russian assets held here. Euroclear reinvests the cash it holds to generate profits, and with the unprecedented scale of frozen Russian assets combined with a high-interest-rate environment, it has earned substantial profits. As of the first quarter of this year, the interest income from Russian assets reached 734 million euros (approximately 1.0438 trillion KRW).
The EU has determined that the ownership of this interest income is unclear and is considering ways to support Ukraine with it. Major foreign media, citing anonymous sources, stated, "Financial institutions themselves do not know what to do with this money (interest income)," adding, "Although there is no precedent for helping Ukraine with the interest, we believe this plan can be realized."
EU officials expect to utilize Russian assets more broadly, including those frozen at Clearstream, an international central securities depository based in Luxembourg.
The Belgian government is also aligning with the EU's plan, intending to use tax revenues generated from Russian assets for humanitarian aid to Ukraine. Belgian authorities estimate that at least 625 million euros in additional tax revenue will be collected this year due to the freezing of Russian assets.
However, some voices caution that legal issues should be carefully considered, taking into account the potential impact on international financial markets. Euroclear held securities worth 35.6 trillion euros as of last year, and if a path is opened to utilize the interest income, it could cause significant ripples in the financial markets.
The EU plans to continue detailed discussions on the utilization of Russian assets at the leaders' summit scheduled for next month. An EU Commission official said, "We are exploring ways to use frozen assets to ensure compensation for the damage Russia has inflicted on Ukraine," but added, "We are conducting discussions with international partners, but the issues are legally and technically complex."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
