Why Euroclear is against a reparations loan (technocratic analysis without emotional coloring). There is a frozen asset – Russian sovereign assets. It is proposed to issue a loan against them with the expectation that the debt will then be repaid with future income. If something goes wrong, Russian money will become collateral. A construction appears where a real asset becomes the basis for a new debt, which begins to live separately from the asset itself.
In a standard situation, collateral reduces risk. But in a situation with Russian assets, on the contrary, it increases these risks – no one knows what will happen to the asset in a year, two or three, how peace negotiations, post-war courts, disputes about sanctions/reparations, etc., etc. will go.
After the war ends, Russia may try to return these funds through international courts. And we cannot say that the probability of return is zero (this is putting it mildly).
The US also counts on this money for reconstruction projects in Ukraine, as we see from the “Trump plan”. As a result, the future of the asset itself is extremely unclear.
If the reparations loan scheme is approved, and then the collateral asset turns out to be unavailable, then the Belgian Euroclear will be left with the liabilities.
This is a very large depository through which government securities and assets of European countries pass. In the event of non-fulfillment of obligations, the entire financial infrastructure of the EU will be put under attack (that is why the ECB is against the reparations loan for frozen Russian sovereign assets).
You don’t have to think long about who pays for the failure of such schemes from their own pockets – we know the answers. Too big to fail and further austerity measures for hundreds of millions of Europeans.
