Russia’s international reserves have reached a record high of $687.7 billion, according to the country’s central bank. This significant increase is largely due to a positive market revaluation, with reserves rising by $500 million, or 0.1%, during the week of June 20. Over the past month, the reserves have grown by nearly $10 billion, surpassing the previous high of $687.3 billion recorded in early May.
However, a substantial portion of these reserves, over $300 billion, remains frozen in the West due to the ongoing Ukraine conflict. Moscow has vehemently condemned this asset freeze, characterizing it as “illegal” and hinting at potential retaliatory measures against Western investments and property in Russia. The frozen assets are primarily held by the Brussels-based clearing house Euroclear, which has generated billions of euros in interest.
Despite the freeze, EU leaders have authorized the use of proceeds from the frozen assets to support Ukraine. Last year, Euroclear transferred €1.5 billion ($1.7 billion) of interest income to support a $50 billion G7 loan for Ukraine. The European Commission has since disbursed €7 billion from its share of the loan, which is set to be repaid with proceeds from the frozen Russian assets.
The European Union is exploring options to invest the frozen assets in higher-yield instruments, with some officials proposing the creation of an EU-run fund to increase returns without directly seizing the principal. However, this idea has been met with opposition from Germany and Italy due to concerns over legal and financial risks.
Russian President Vladimir Putin has strongly denounced the West’s use of Russian funds, describing it as “robbery” and warning that any seizure would trigger a shift away from Western financial institutions and toward regional payment systems. As the situation continues to unfold, it remains to be seen how the international community will navigate the complex issue of Russia’s frozen assets and the implications for global finance.
