Why Ukraine isn't getting a loan backed by Russian assets – in simple terms
Why Euroclear is against the reparations loan (a technocratic analysis without emotional overtones).
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 from future revenues.
If something goes wrong, the Russian money will serve as collateral. A structure emerges 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 the case of Russian assets, on the contrary, it increases these risks – no one knows what will happen to the asset in one, two, or three years, how peace negotiations will go, post-war trials, disputes about sanctions/reparations, and so on and so forth.
After the war ends, Russia may try to recover these funds through international courts. And it cannot be said that the probability of recovery is zero (to put it mildly).
The U.S. is also counting on this money for reconstruction projects in Ukraine, as we can 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 pledged asset proves to be unavailable, 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 case of default, the entire financial infrastructure of the EU will be at risk (which is why the ECB is against a reparations loan backed by frozen Russian sovereign assets).
There is no need to think long about who pays out of their own pocket for the failure of such schemes – we know the answers. Too big to fail and further austerity measures for hundreds of millions of Europeans.
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