Ukraine, FT: ‘ECB refuses to back €140 billion loan to Kiev backed by Russian assets’

Frankfurt (Germany), 2 December. (LaPresse) – The European Central Bank (ECB) has refused to provide a guarantee for a €140 billion loan to Ukraine based on frozen Russian assets, according to the Financial Times. Frankfurt concluded that the proposal put forward by the European Commission would violate the ECB’s mandate, the British newspaper reported, citing official sources. Brussels officials had asked the ECB if it could act as lender of last resort for Euroclear Bank – the operating subsidiary of the Belgian central depository – to avoid a possible liquidity crisis, people familiar with the matter told the FT. The ECB replied that this was not possible. The newspaper also cites an internal ECB analysis, according to which the Commission’s initiative would be equivalent to direct financing to governments. In such a scenario, the central bank would end up covering the financial obligations of EU member states, a practice prohibited by European treaties because it risks fuelling inflation and undermining the institution’s credibility. Russian Foreign Ministry spokeswoman Maria Zakharova warned that Moscow’s reaction would be ‘very harsh and painful’ if EU countries used frozen Russian assets to finance a ‘reparation loan’ to Ukraine.