Ukrainian President Zelensky is advocating for the utilisation of billions seized from Russia by world banks to aid in the reconstruction of Ukraine. While the G7 group is contemplating accessing only the accrued value and interest since the freezing of assets in 2020, President Zelensky insists that the entirety of the funds, approximately $300 billion, should be deployed. The BBC reveals that European central bankers express reservations, fearing potential repercussions on banks’ safe haven status.
Amid varying enthusiasm from the US and UK governments, European central bankers are cautious about setting a precedent that could destabilise global financial security. This scepticism, particularly among Belgium’s central bankers, poses challenges to the broader plan, as Belgium holds a significant portion of the frozen assets due to its role in the clearing system for European reserves. The country has already imposed charges on some funds, generating €2 billion for Ukraine. Advocates of the broader plan estimate that tens of billions of dollars could be raised from the $360 billion in frozen assets, coupled with high interest rates.
President Zelensky, speaking at the World Economic Forum in Davos, Switzerland, emphasised that Western taxpayers should not bear the financial burden of the war in Ukraine. He urged the direct use of the $300 billion in frozen Russian assets to rebuild what has been devastated by Russian attacks. Meetings with influential figures like Jamie Dimon of JP Morgan and Steven Schwarzman of Blackstone took place during Zelensky’s presence at Davos.
However, Bill Winters, Standard Chartered’s CEO, cautioned that the global financial community’s response to seizing profits from Russian assets might be “mixed.” He expressed concerns about potentially “weaponizing” central banks and currencies, highlighting the need for caution to avoid unintended consequences for the already weaponized US dollar through sanctions.
President Zelensky, addressing the World Economic Forum, emphasised that some in the West were in denial about Putin’s territorial ambitions and stressed that Ukraine defends Europe and requires more assistance.