Russia’s central bank has filed a lawsuit against Euroclear in a Moscow court, escalating its pushback as the European Union moves to keep roughly €210bn of Russian sovereign reserves immobilised and debates using them to underpin a Ukraine financing package. Brussels says institutions are protected in law; Moscow calls the plan theft. EU ambassadors this week endorsed an indefinite immobilisation using emergency powers to avoid six‑monthly renewals.

Scale matters here. Around €210bn of Russia’s central bank assets are stuck in the EU, with the bulk lodged at Brussels‑based Euroclear. By end‑September 2025, Euroclear reported about €193bn of sanctioned Russian balances on its own balance sheet, reflecting coupons and maturities that have converted securities into cash over time. Figures differ by cut‑off date, but the centre of gravity is in Belgium.

Belgium is not a bystander. Prime Minister Bart De Wever wants watertight burden‑sharing and legal shields before backing any reparations‑style loan, and has not ruled out legal action if EU partners press ahead without adequate guarantees. He raised the issue in London today with UK Prime Minister Keir Starmer as the two leaders discussed Ukraine support and wider security ties.

Two financing routes are on the table for 2026–27: conventional EU borrowing backed by the EU budget, or a new “reparations loan” that would borrow against the cash balances held by institutions like Euroclear while keeping Russia’s legal ownership of principal intact. The Commission says both options are designed around existing law, with leaders due to decide at the 18–19 December summit.

To soothe Belgian concerns, Brussels has paired the loan idea with legal safeguards. One key element allows Euroclear to offset any seizure of its assets in Russia-estimated in the mid‑teens of billions of euros-against Russian clearing‑house assets held in the EU. A separate step uses Article 122 of the EU treaties to immobilise central‑bank reserves indefinitely, reducing veto risk from periodic sanctions rollovers.

Euroclear, led by Valérie Urbain, has warned the loan architecture is “very fragile” and could even “destabilise the international financial system” given its role in global settlement. The firm worries about liquidity, retaliation against assets it still has in Russia, and reputational risk if investors view the move as quasi‑confiscation.

Central‑bank voices have been cool on requests to backstop the scheme. The European Central Bank has indicated it would not provide emergency liquidity to such a structure and has cautioned that mishandling sovereign immunities could dent confidence in the euro. That leaves political guarantees and budget backstops doing the heavy lifting.

Why now? Ukraine’s external financing needs for 2026–27 are estimated at about €135.7bn in EU documents drawing on IMF projections. Commission drafts suggest the bloc could aim to cover roughly two‑thirds-about €90bn-through the asset‑backed loan, with partners filling the rest. Numbers vary in circulating drafts, but the order of magnitude is clear.

For UK readers, this is not just a Brussels story. Euroclear is a core market utility for global bond settlement used widely by City institutions. Any perception shift on euro‑area property rights, or a mis‑step that forces fire‑sale liquidity, would ripple through sovereign spreads, collateral chains and fund operations-especially in euro paper. Euroclear itself has warned that risk premia could rise if investors read the move as precedent‑setting.

The EU has already channelled “windfall” interest on the immobilised balances to Ukraine. Euroclear contributed roughly €3.5bn for the 2024 fiscal year and says total transfers linked to the regime have reached about €5bn to date, with flows continuing in 2025 as rates remain elevated. These measures stop short of touching principal.

Russia’s litigation adds a further risk vector. Beyond the Moscow suit, officials in Brussels expect more cases and potential tit‑for‑tat seizures. The EU’s answer is a mix of offset rights, member‑state guarantees and an indefinite freeze to make sudden unfreezing legally harder. Markets will watch whether those layers satisfy Belgium-and ratings agencies assessing contingent liabilities.

Next week’s European Council is the decision window. If leaders converge on the loan with safeguards, attention shifts to legal drafting and implementation timetables. If talks stall, expect a pivot back to plain‑vanilla EU borrowing-politically trickier given unanimity hurdles but simpler for market plumbing. Either way, today’s lawsuit underlines the stakes for Europe’s market infrastructure and for Kyiv’s 2026 funding bridge.