Euroclear, Frozen Russian Funds, and the Lawful Pathways to Supporting Ukraine

The question of whether, and how, Europe can channel immobilised Russian state assets towards Ukraine’s defence and reconstruction has moved from moral argument to practical design. At the centre of this debate stands Euroclear in Brussels, the world-spanning securities plumbing that, by historical happenstance and market gravity, now holds the largest single pool of frozen Russian central-bank reserves outside Russia. Understanding what Euroclear is, what is frozen there and why, and then mapping the lawful and politically feasible routes to deploy those resources, is essential to judging what Europe may do next.

What Euroclear is

Euroclear is a systemically important financial market infrastructure: a central securities depository and settlement platform that safekeeps securities and cash for banks, asset managers and central banks, and settles cross-border transactions across asset classes. Through its Belgian bank and a network of national CSDs (central security depositories), Euroclear performs custody, settlement and related services for international securities; in that sense it is part of the backbone of global capital markets rather than a discretionary investor. Its public materials emphasise its role in settlement, custody and issuance across Europe and internationally. 

What is frozen in Euroclear, and why

Within days of Russia’s full-scale invasion of Ukraine in February 2022, the European Union adopted measures that, amongst other things, prohibited transactions related to the management of the reserves and assets of the Central Bank of Russia (CBR). That prohibition—adopted by amending Regulation 833/2014 under Article 215 TFEU and the parallel CFSP decision—has the practical effect of immobilising the CBR’s Euro-area assets under EU jurisdiction. In parallel, Regulation 269/2014 continues to impose an asset freeze on designated Russian individuals and entities. The first captures the sovereign (central-bank) pot; the second captures private or state-linked listed persons. 

Because significant slices of Russia’s reserves and portfolio securities were custodied and settled through Euroclear, a very large stock ended up immobilised in Belgium. Public estimates vary with market movements and maturities, but authoritative reporting and EU briefings place EU-jurisdiction immobilised Russian sovereign assets at roughly €210 billion, the great bulk in Euroclear. By mid-2025, around €185–194 billion was reported as held there, and much of the originally held securities had matured into cash balances that simply cannot be remitted. 

Two policy consequences flow from immobilisation. First, the assets continue to generate interest and other cash income while they sit. Second, the inability to transact has produced extraordinary windfall profits for the CSD that holds them—because cash balances must be managed and collateralised in a high-rate environment—yielding sizeable taxable income in Belgium and distributable earnings that the EU could lawfully harness. Public sources record Euroclear’s profits on these holdings and Belgium’s corporate tax take on them as unusually large in 2023–2024. 

What the EU has already decided to do

The European Council has not authorised outright confiscation of the principal of Russian sovereign assets. Instead, in May 2024 the Council agreed to capture the net windfall profits generated by the immobilisation and channel them to Ukraine, primarily for military support via the European Peace Facility and to rebuild defence-industrial capacity, with biannual remittances from CSDs starting 15 February 2024. This is a targeted measure against the profits arising from immobilisation, not a seizure of the underlying principal. 

As mechanisms matured, the Commission and Member States operationalised a first wave of EU financing backed by these extraordinary revenues: in January 2025 the Commission disbursed an initial €3 billion under the G7-aligned structure that services and repays loans with the proceeds of immobilised assets. Separately, Belgium has taxed Euroclear’s 2024 profits associated with the Russian balances—reported at about €1.7 billion—and has politically committed large portions of those receipts to Ukraine. Euroclear itself has earmarked and transferred sizeable amounts of 2024–2025 earnings into an EU-directed Ukraine facility. 

Beyond the profits channel, the EU and G7 designed a larger “extraordinary revenue” loan architecture: a G7/EU loan—often cited at $50–45 billion in 2024, with discussion in 2025 of an additional, EU-centric “reparations loan” potentially exceeding €100 billion—serviced over time by the continuing stream of profits and cash balances associated with the immobilised assets. This approach aims to accelerate aid now while preserving the legal position that the underlying principal remains the property of the Russian Federation until international law provides otherwise (for example, through reparations). 

Why confiscating the principal is so contested

The core legal hurdle is sovereign immunity. Central bank assets ordinarily enjoy immunity from execution under customary international law and national statutes. The EU’s current framework immobilises management of the CBR’s reserves, but converting immobilisation into confiscation or permanent expropriation of principal would test those immunities and could provoke reciprocal measures by third countries against European reserves. European institutions and several capitals therefore treat seizure as a last resort without a clear international law justification tied to state responsibility and reparations. The European Parliament’s brief academic analyses, and leading public-law commentary, all note the absence of uncontested precedent. 

The practical channels available to reach the principal, moreover, run through Belgian law because Euroclear is in Brussels. Belgium’s government has repeatedly signalled that, while keen to channel profits and tax revenues to Kyiv, it views outright seizure of principal as too risky at present—citing systemic implications and legal vulnerabilities—preferring to leave the “goose that lays golden eggs” intact while the war continues. 

Political feasibility in late-2025

Politically, support has tightened for using the income stream from immobilised assets to finance Ukraine at scale, including weaponry and defence-industrial investment. The EU deal on windfall profits and the G7 “extraordinary revenue” loan are already in motion. Debate is now concentrated on how far to leverage the cash balances and how to structure any new EU-only “reparations loan” so as to avoid unanimity traps and litigation risk, while protecting Euroclear’s operational stability. Recent reporting records both the quantum of assets at Euroclear and emerging proposals—from EU leaders and national governments—for larger, interest-free facilities for Kyiv backed by the immobilised pool. Nevertheless individual Member States, sceptical of escalation, may opt out, and legal services across the EU remain cautious about any step that looks like de facto confiscation. 

The lawful pathways from here

Three distinct tracks now exist, each with different legal profiles and political odds.

1. Continue and scale the profits channel

   
   

   This is the lowest-risk route: harvest net windfall profits from immobilised assets and send them, via the European Peace Facility and related instruments, to Ukraine on a rolling basis. Its legal basis is already enacted in EU law and implemented operationally by Euroclear and Belgium; it avoids violating sovereign immunity because it does not touch principal. The downside is that the stream—even at several billions per year after Belgian corporate tax—may be insufficient on its own to meet Ukraine’s fiscal and military needs, hence the resort to leverage through loans. 

   
   

2. Loans backed by extraordinary revenues and cash balances

   
   

   The G7 loan serviced by profits created a precedent for using future revenue to support large, near-term disbursements. Proposals circulating in 2025 would extend this logic by having the European Commission or an SPV issue zero-coupon instruments, with Member State and potentially G7 guarantees, backed by cash balances associated with the immobilised assets. Crucially, in the most legally conservative designs, the Russian principal would be replaced, on Euroclear’s balance sheet, with EU paper of equivalent value, preserving the legal status of the Russian claim while freeing usable liquidity for Ukraine today. This structure relies on two pillars: that immobilisation will continue for long enough to service the debt, and that courts will treat the substitution and use of cash balances as distinct from confiscation. The political advantage is speed and scale without crossing the bright line of seizure; the risk is complexity, challenge in court, and the need to firewall Euroclear from any credit or operational hit. 

   
   

3. Confiscation of principal as part of reparations enforcement

   
   

   This is the most contested path. It would likely lean on arguments from the international law of state responsibility—namely that Russia’s aggression gives rise to an obligation to make full reparation, and that countermeasures could exceptionally justify execution against sovereign assets. Even proponents concede this would be novel in peacetime practice, and it would raise concerns about central-bank immunity and systemic retaliation. EU institutions have, for now, steered away from authorising confiscation, preferring the profits/loan approach while supporting work on a reparations mechanism anchored in a future settlement. Politically, a consensus to seize principal looks unlikely in the near term; legally, any such step would be designed to maximise multilateral cover (G7/EU) and to ring-fence financial stability risks. 

Risks and safeguards

Legal risk

Any move beyond profits invites litigation by Russia, sanctioned entities and possibly private parties, testing both EU measures and Belgian implementation. Designs that substitute EU paper for Russian claims aim to reduce this risk by keeping the sovereign’s property interest notionally whole while transferring usable value to Ukraine. The evolving Commission FAQs and Member State guidance under Article 5a of Regulation 833/2014 show how carefully the EU has managed immobilisation reporting and scope to date; the same care will govern any expansion. 

Financial-stability risk

Euroclear is market infrastructure. Any policy that imperils its balance sheet or operational continuity would be self-defeating. Credit enhancements, retention of buffers at Euroclear, and predictable remittance calendars are therefore central to current EU schemes. Rating-agency commentary and EU press materials to date reflect a determination to keep Euroclear insulated. 

Foreign policy risk

Confiscation of principal might trigger counter-seizures of European assets abroad or encourage reserve diversification away from Euro markets. Even some governments strongly supportive of Ukraine therefore argue for preserving the immobilised pool as a long-term lever and revenue source rather than killing it prematurely. 

Governance risk inside the EU

Because sanctions and financial measures often demand unanimity, one or two member states can block bolder designs. The current approach—modular participation, Commission-run instruments, and G7 parallelism—seeks to mitigate veto risk while moving sufficient political weight behind the financing. Recent reporting underscores both growing support among major capitals and the likelihood that any next-step instrument will be crafted to allow opt-outs without stopping the coalition. 

A prudent forecast

In the near term, Europe is most likely to deepen the path it is already on: continue remitting windfall profits from immobilised assets to Ukraine; widen their permitted uses to munitions procurement and defence-industrial investment; and scale the loan architecture serviced by those profits and by associated cash balances held at Euroclear. This is both legally conservative and politically viable, and it has already produced cash to Kyiv in 2024–2025. The quantum available through this channel, while meaningful—several billions per year net of Belgian tax, with scope for tens of billions in leveraged facilities—will still be below Ukraine’s comprehensive needs, but it is steady, legally defensible and expandable. 

Confiscating principal outright remains unlikely absent a negotiated reparations framework or a broader G7/EU legal doctrine expressly tying execution to state responsibility for aggression. The most credible interim innovation is a larger EU-only or EU-led “reparations loan” that replaces Russian principal on Euroclear’s books with Commission paper and places usable funds in a special-purpose vehicle for Ukraine’s defence and reconstruction—precisely the kind of architecture now under active discussion among EU leaders and the G7. 

Conclusion

Euroclear’s role is not political by nature; it is the capital markets’ plumbing. But because Russia chose to wage a war of aggression and happened to keep substantial reserves in Euro markets, the plumbing became a fulcrum. EU law has immobilised the CBR’s assets and lawfully tapped the windfall profits that immobilisation generates; Belgium has taxed those profits and directed large sums to Ukraine; the EU and G7 have leveraged the revenue stream into significant loans. The next steps will be engineered to remain within international law guardrails while increasing scale and predictability. For now, the most legally sound and politically resilient path is to keep the assets frozen at Euroclear, harvest and leverage the proceeds, and build instruments that convert those proceeds into Ukraine’s defence today—without breaking the immunities Europe relies upon tomorrow.