Europe’s €90 Billion Gamble: A Precedent That Risks Financial Stability

Europe’s €90 Billion Gamble: A Precedent That Risks Financial Stability

“When frozen assets become political instruments, stability becomes collateral.”

✍️ Author’s Note

A brief reflection on the shifting winds in Brussels. As the EU turns frozen Russian assets into political instruments, the question is no longer whether this supports Ukraine—but whether Europe is prepared for the long-term financial and legal consequences.

With Ursula von der Leyen’s latest announcement—proposing a €90 billion loan to Ukraine, backed by frozen Russian assets—the wind in Brussels is unmistakably shifting. Officially, this is “not” confiscation but a loan secured by the €90 billion in Russian state funds held at Euroclear. In practice, however, the distinction is academic. If Ukraine is only required to repay the loan once Russia pays reparations—a scenario unlikely to materialise in any conceivable settlement—then the EU has effectively decided to treat Russian assets as expendable collateral.

This move continues the EU’s long and costly financial commitment to Ukraine, a commitment that increasingly resembles a bottomless pit—emotionally justified, politically useful, and economically uneven across member states. The debate also exposes the long-standing imbalance in burden-sharing, and it brings the dormant question of a genuine Eurobond back to the forefront. More troubling still, it nudges the EU into legally uncharted territory, with direct implications for Europe’s financial stability.

Only two years ago, member states rejected outright the idea of confiscating Russian state assets. The reasons were well known: risks to the integrity of the international securities system, the threat to investor confidence, and the precedent it would set for any state whose assets might one day fall out of favour. But the geopolitical context has changed. U.S. support—until now the backbone of Ukraine’s war effort—is no longer guaranteed under the new administration, and the EU’s own sanctions regime is set to expire in July, potentially forcing the release of frozen Russian funds. Faced with these pressures, Brussels has begun to rethink the once-untouchable.

Yet the broader implications remain far from resolved. If the EU sets a precedent for turning frozen state assets into political instruments, other nations may well conclude that their reserves are no longer safe in European hands. What begins as a gesture of solidarity with Ukraine may, in time, reshape the global calculus of financial trust—and not necessarily to Europe’s advantage.

William J J Houtzager, Aka WJJH, December 2025

📌Blog Excerpt

With its plan to issue a €90 billion loan to Ukraine—secured by frozen Russian assets—the EU has crossed a line it once considered untouchable. Presented as a gesture of solidarity, the scheme risks eroding legal certainty, investor trust, and financial stability within the Union. Turning state reserves into political tools may solve today’s problem while creating far greater ones tomorrow.