Overview

• EU officials are working on a reparation loan for Ukraine that would be structured by a coalition of willing countries to avoid a potential Hungarian veto, according to Reuters.
• The emerging mechanism would replace immobilized Russian holdings with zero-coupon bonds issued by the European Commission and guaranteed by all or only participating member states, with an option to park the assets in a special-purpose vehicle for better returns.
• Roughly €210 billion in Russian sovereign assets are immobilized in Europe, much of it now held as cash at Euroclear, which has limited the interest income available under existing arrangements.
• Germany has shifted to support expanded use of the frozen assets, Bloomberg reported, with EU finance ministers discussing options in Copenhagen this week and leaders expected to take decisions at an October summit.
• Russia’s Dmitry Medvedev warned of legal and other reprisals if assets are taken, even as the EU continues channeling profits from the holdings to service the G7’s $50 billion loan to Kyiv.