In light of ongoing discussions over frozen Russian state funds, Euroclear has expressed concerns regarding the European Commission's investment plans.
Euroclear's Warning
Euroclear, the Brussels-based central securities depository, has strongly objected to the European Commission's plan to invest returns from frozen Russian assets into riskier financial instruments. The institution's CEO, Valérie Urbain, stated in an interview with the Financial Times that such a measure could expose the EU's financial system to increased legal, market, and geopolitical risks, potentially constituting what she called 'expropriation.'
Legal Challenges for Investment
One proposal under consideration involves the creation of a special purpose vehicle (SPV), a separate legal entity to which the assets of the Russian central bank would be transferred. Urbain cautioned that this method could lead to 'expropriation' of the assets from Euroclear and could present legal obligations toward the Russian central bank. She also noted that Euroclear is already facing over 100 lawsuits related to its frozen assets.
Euroclear's Strategy and Market Integration
Urbain emphasized that implementing safeguards is essential for any attempt to invest in riskier assets. Amid current challenges, Euroclear aims to facilitate the integration of capital markets across EU member states and plans to launch a 'single access point' for investors. 'We want to contribute to the development of an integrated European capital market,' Urbain concluded.
Euroclear's warnings highlight the complexities and risks associated with the final decision on how to utilize frozen Russian assets, underscoring the need to adhere to legal frameworks and ensure financial stability.
