Moscow has put forth a proposal to allow European Union (EU) investors to use their funds that are currently blocked in Russia to purchase Russian assets that have been frozen by the EU. The Bank of Russia made this suggestion on Wednesday, aiming to unblock approximately $1.1 billion out of the $16 billion in holdings owned by 3.5 million Russians that are currently stranded in the EU.
The main objective of this proposal is to provide a path for EU investors to access their funds while also facilitating the purchase of Russian assets that have been frozen by the EU. The central bank’s press office stated that the volume of assets available for unblocking would be limited initially, and the opportunity to buy these frozen assets would be given to retail investors first.
According to the Bank of Russia, foreign investors will be able to use funds that are currently held in C-type accounts. However, participation in this process will be voluntary. This means that investors will have the option to use their blocked funds to purchase Russian assets if they choose to do so.
Further details of the proposed deal have not yet been released by Moscow. Finance Minister Anton Siluanov and the central bank have stated that the specifics will be outlined in a decree to be signed by President Vladimir Putin. The proposal has not yet been brought to the attention of Brussels, as four senior EU officials have confirmed to the Financial Times that no talks have been initiated regarding a potential asset swap.
It is worth noting that approximately €200 billion of Russian assets has been frozen by Ukraine-related sanctions at Euroclear, the world’s largest settlement house. Out of this amount, €180 billion belongs to the Russian central bank, according to the Belgian government. The European Commission has been exploring legal ways to utilize these immobilized Russian funds to support Ukraine’s reconstruction. One potential option is to use the interest generated by the assets held in EU financial institutions.
European Commission President Ursula von der Leyen announced in June that Brussels would prepare a legal proposal for the transfer of Russian assets. However, the proposal put forth by Moscow to allow EU investors to use their blocked funds to purchase Russian assets appears to be a separate initiative.
As of now, the exact process and timeline for implementing this proposed swap between EU investors and Russian assets remain unknown. It will require further discussions between Moscow and Brussels to determine the feasibility and potential benefits of such an arrangement. Until then, the fate of the blocked funds and the frozen assets will continue to be a topic of interest and speculation.