Loan instead of Russian assets: how the EU explains its decision on Ukraine

European Union leaders have decided to finance Ukraine’s defense with a loan rather than frozen Russian assets. The EU plans to raise a loan of 90 billion euros to avoid political and financial disputes within the bloc.

Reuters reports this.

The decision has sparked mixed reactions among investors, experts and financial analysts, with some disagreeing with the argument that using frozen Russian assets could undermine confidence in the euro as a reserve currency.

At the same time, other experts believe that the rejection of these assets indicates the EU’s caution in confiscating other people’s reserves and its desire to avoid legal and financial risks.

Another group of analysts highlights the possible negative consequences for the government bond market. In their opinion, the use of Russian assets to finance the war could reduce the value of European bonds, increase sovereign debt rates, and create an additional fiscal burden for EU countries.

As previously reported, the Central Bank of Russia threatened the European Union with legal actions and compensation demands if it continues to use frozen Russian assets to support Ukraine.

Recall that the European Union countries have reached a turning point on the issue of using frozen Russian assets for financial assistance to Ukraine, but discussions on technical details are ongoing.

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