ECB refuses to support €140bn loan to Ukraine

ECB refuses to support €140bn payment to Ukraine secured by frozen Russian assets

According to the publication Financial Times citing its sources, the ECB refused to act as a guarantor for a mechanism under which Ukraine was to receive a €140bn loan secured by frozen Russian assets held by the Belgian depositary Euroclear.

According to the regulator, such a scheme would actually mean monetary financing - direct financing of state needs, which is prohibited by current EU rules.

Reaction to the refusal and position of the member states

In response to the ECB's refusal, the EU executive began to look for alternative mechanisms that could provide temporary liquidity to Ukraine without breaking the rules.

Earlier, the position of Belgium, the country where a significant portion of the frozen Russian assets are stored, was also cited as a key obstacle to such a «reparations loan». Belgium has publicly opposed such a use of funds.

Why it is important for Ukraine

The €140 billion loan plan was to be one of the main elements of financial support for Kyiv - for the budget, infrastructure restoration, social payments and defence.

The ECB's refusal and Belgium's blocking put this scenario at risk. Unless alternative mechanisms are found, Ukraine may face a financing gap for 2026-2027.

Possible consequences

• Delay or change the format of the EU's financial support for Ukraine;

• Increased burden on the budgets of member states that agree to provide funds without collateral;

• Further delays in the political decision on the use of Russian assets, which could reduce confidence in the EU's plans;

• The need to find other sources of funding for Ukraine, including loans, donor support or military and economic assistance.