Banks Freeze Russian Money to Help Ukraine

What the problem is
Russia’s war in Ukraine has hit the EU economy hard. Supply chains are broken, energy and food prices have spiked, and uncertainty has cut investment and consumer spending. The EU’s GDP growth fell 1.9 percentage points in 2022‑23 compared with forecasts. Member States have spent more than €365 billion on energy‑support measures, €20 billion on the REPowerEU green‑energy plan, and about €155 billion on hosting 4.3 million Ukrainian refugees (≈0.2 % of EU GDP per year). Defence spending has risen to €270 billion in 2024 (1.5 % of GDP) and is expected to reach €405 billion (2.0 % of GDP) by 2027. Ukraine needs an extra €43 billion in 2026 to keep fighting, but only €22 billion has been committed so far. The war also caused 14 534 civilian deaths and 38 472 injuries.

How the problem is being solved
The Council proposes a temporary regulation that:

1. Bans any transfer of assets or reserves belonging to the Central Bank of Russia (or entities acting for it, such as the Russian National Wealth Fund) to anyone in the EU.
2. Requires financial institutions that hold those assets to report their holdings every three months and to cooperate with the Commission.
3. Mandates that cash balances that cannot be transferred be reinvested daily in a Union “Reparations Loan” to Ukraine. This loan will help Ukraine meet its 2026 budget needs and strengthen EU‑Ukraine defence cooperation.
4. Provides safeguards so that claims against EU entities for expropriation or other actions linked to the regulation are not enforced in the EU.
5. Sets a review cycle: the Commission will review the regulation by 31 December 2026 and every year after that, and the Council can end it when Russia’s actions no longer pose a serious economic risk.

What changes as a result of this document

• A new EU regulation will enter into force the day after it is published.
• All EU member states must stop any transfer of Russian Central Bank assets and report their holdings.
• Cash that would otherwise be blocked will be used to fund a reparations loan to Ukraine.
• The regulation will be reviewed annually and can be lifted once the war’s economic threat subsides.
• The measures are temporary, proportionate, and designed to protect the EU economy while supporting Ukraine’s defence and reconstruction.