EU urged to move Russian assets risk out of Belgium

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EU urged to shift Russian assets risk

Highlights

The EU is considering moving Russia-related assets and liabilities out of Euroclear and Belgium to reduce legal and political exposure, especially amid renewed U.S. interest in the frozen funds.
A proposed restructuring would allow the European Central Bank to require Euroclear to separate excessive risk on its balance sheet, shielding core operations from potential fallout.
The article criticizes Belgium’s exclusive supervision of Euroclear as inadequate, urging the ECB to assume direct oversight to mitigate systemic risks for the eurozone financial system.

Proposal to isolate Euroclear exposure

As argued by the Financial Times, the immediate priority for the EU is not to decide how the Russian assets should be deployed, but to preserve its ability to make that choice while limiting the risks tied to Euroclear and Belgium. The article says those risks have become more pressing as Washington again considers oversight of the frozen funds, which are seen as a source of EU strategic leverage.

The core proposal is to move the Russia-related assets and liabilities out of Euroclear and into a separate entity in a country better able to absorb any remaining risk. Under this approach, the European Central Bank could use its powers to require Euroclear to separate the part of its balance sheet judged to pose excessive risk, shielding the group’s market-critical operations from legal, reputational and political fallout.

The article argues that such a restructuring would not alter Russia’s claim to the assets or solve Ukraine’s financing needs on its own. It would, however, widen the EU’s room for manoeuvre and reduce vulnerability if the U.S. mounts a determined push to influence or take control of the funds.

Supervision debate and eurozone impact

Another concern is the current supervisory structure around Euroclear. Although the ECB directly supervises significant institutions, the piece says Belgium’s central bank remains in charge of Euroclear because the ECB has relied on a legal provision allowing national oversight in particular circumstances.

The article criticizes that arrangement as inadequate for a situation involving liabilities linked to Moscow and potential systemic consequences for the eurozone financial system. It contends that the ECB can still assume direct supervision or work more closely with the Belgian regulator, and that the issue is less about legal authority than about whether eurozone officials are willing to treat the exposure as a broader financial stability risk.

For the EU, the wider business implication is that a major market infrastructure group and the public finances of a small eurozone member should not remain so closely tied to a politically sensitive asset pool. Isolating that exposure, the article argues, would strengthen financial resilience even apart from the war in Ukraine.

In our earlier article on sovereign resilience in a higher-rate environment, we discussed how persistent geopolitical shocks and elevated fiscal spending are increasing borrowing and refinancing risks for governments. We noted that emerging and frontier markets are particularly exposed because high interest-service costs collide with relatively limited revenue bases, while war-driven energy and food inflation adds further strain to public finances.

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