ECB refused to insure Ukraine's €140 billion reparations loan
The European Central Bank has refused to act as lender of last resort for the European Commission’s plan for a €140 billion loan that was to be backed by frozen Russian assets; the Commission is seeking other options to secure liquidity.
By Oleg Bazylewicz
December 2, 2025 · 1 min read
The European Central Bank refused to act as a "lender of last resort" in a scheme to provide Ukraine with a reparations loan of €140 billion that would have been backed by frozen Russian assets.
Role of the ECB and mandate
Following an internal analysis, ECB leadership concluded that the proposed structure effectively amounted to direct financing of governments, since the central bank would find itself in a position of covering member states' liabilities.
"This proposal is not being considered, as it would likely breach EU treaty provisions prohibiting monetary financing"
– ECB
Request to the ECB and alternatives
The European Commission's initiative envisaged that EU countries would provide state guarantees to share the risks of repayment. At the same time, the Commission acknowledged that governments would not be able to quickly gather the necessary sums in an emergency.
Therefore, European Commission officials asked the ECB to temporarily provide liquidity to Euroclear Bank — the credit arm of the Belgian depository — to avoid an acute cash shortfall. The central bank refused.
"Ensuring the necessary liquidity for potential obligations to return assets to the Russian central bank is an important part of the potential reparations loan. This is necessary so that the EU, its member states and private entities can always meet their international obligations. Work is ongoing on how exactly to guarantee this liquidity"
– European Commission
After the ECB refusal, the Commission began looking for other mechanisms to secure the loan and minimize liquidity risks.
- The idea of a reparations loan of up to €140 billion based on frozen Russian assets was proposed on 10 September.
- Under the plan, Ukraine could receive about €45 billion per year in the period from 2026 to 2028.
- On 23 October the decision on this loan was postponed until December.
- The final decision will affect the possibility of agreeing a new lending program between Ukraine and the International Monetary Fund.
