Euroclear has cautioned EU officials about potential risks linked to plans to use frozen Russian assets as collateral for loans to Ukraine, reported Ukraine Business News.

The depository warned that a proposed credit plan worth €140bn could raise borrowing costs for European governments. Officials indicated that, outside the EU, the scheme might be perceived as “confiscation,” potentially deterring investment in European sovereign debt.

The warning comes as Ukraine faces pressing challenges in the ongoing conflict, including shortages of personnel and weaponry, while Russia continues to expand its drone production and capabilities to breach Ukrainian air defences. Analysts note that Europe, with an economy roughly ten times the size of Russia’s, could address Kyiv’s funding needs through a reparations-style loan mechanism.

Despite recognising the threats posed by Russia, EU member states have not yet reached consensus on granting the loans. EU foreign ministers have discussed intensifying pressure on Moscow and increasing aid to Ukraine, with an immediate ceasefire cited as the first step toward ending the war. European Commission President Ursula von der Leyen has proposed funding sources including grants, loans from EU states, joint EU borrowing, and frozen Russian assets.

The debate highlights the tension between supporting Ukraine’s war effort and managing financial and legal risks for EU economies.