A power sitting on an enemy treasure, choosing to take on debt rather than touch it: the scene is startling. Since 2022, Europe has immobilised nearly 193 billion euros of Russian reserves. It would seem enough, on the face of it, to seize them to finance Ukraine. The Union chose the opposite: to borrow. This hesitation is not weakness; it is the clear-eyed calculation of a weapon whose use would destroy what gives it force. This sheet explains why freezing is not confiscating, and why a reserve currency protects itself by never abusing the power it confers.
1 The fact
Sitting on a treasure, Europe would rather borrow.
The fact
193 billion frozen, and yet the Union borrows
Since the 2022 invasion, some 193 billion euros of Russian central bank assets have been immobilised at Euroclear, the central securities depository based in Brussels (about 210 billion are frozen across Europe as a whole). To finance Ukraine, the EU long debated a "reparations loan" backed by this treasure. Then, on 18 December 2025, it decided otherwise: to borrow 90 billion euros on the markets, guaranteed by the common budget. It takes on debt itself rather than touch the aggressor's money. The contradiction is glaring: why give up a fortune already at hand?
Russian assets at Euroclear
≈ €193bn
immobilised since 2022; the core of the frozen reserves.
The chosen loan
€90bn
EU borrowing for 2026-2027, guaranteed by the budget.
2 Freezing is not confiscating
The decisive point of law.
The distinction
Immobilising without appropriating
It all turns on a point of law. To freeze an asset is to block it: the owner can no longer access it but remains its legal holder. To confiscate is to transfer ownership. The Union carefully stays on the freeze side. It mobilises the "windfall profits" these assets generate (the interest earned when blocked coupons are reinvested, about 2.7 billion euros in the first half of 2025), while preserving the underlying capital. The legal argument: this interest is not Russia's sovereign property but a by-product of the sanctions regime. Touching the capital itself, the 193 billion, would be an altogether different act, legally untested and hotly contested.
3 Sovereign immunity
Why a state's reserves are protected.
The principle
A taboo that holds only as long as it is not broken
A central bank's reserves enjoy special legal protection: sovereign immunity. A state cannot, in principle, be judged, nor its sovereign assets seized, by another's courts; foreign-exchange reserves are the textbook case. This principle is no lawyers' subtlety: it is what lets a central bank hold its reserves abroad without fearing they will be taken. Its value lies precisely in never being transgressed. Seizing the Russian reserves would give Ukraine about 200 billion once; but breaking the taboo would weaken the promise on which every financial centre lives.
4 Belgium's veto
Euroclear on the front line.
The blockage
The depositary's home country holds the veto, and used it
The 193 billion sit at Euroclear, a Belgian depositary. So it is Belgium that bears the risk, and its Prime Minister Bart De Wever rejected the "reparations loan" as legally dangerous. Seizing the capital would expose Euroclear, and the Belgian state behind it, to retaliation and lawsuits: Russia's central bank has in fact sued Euroclear to block any loan backed by its money. Brussels fears years of litigation, damage to its financial marketplace and to the euro's credibility. The country hosting the treasure effectively holds a veto; it used it.
5 The feared precedent
Seize today, drive the reserves away tomorrow.
The systemic effect
What every central bank in the world would see
The deepest fear is not legal, it is systemic. If the Union seizes sovereign reserves, it signals to every central bank: state money deposited in Europe can be taken for political reasons. Reserve managers in non-aligned countries would draw the lesson and move their holdings elsewhere, toward other currencies, other depositaries, and toward gold, the asset no one can freeze. The weapon fired once would repel the very deposits that make Europe a financial centre. One would win a funding battle at the risk of losing the attractiveness that is built over decades.
Read alongside
This is the exact reverse of a neighbouring analysis:
the reserve asset no government can freeze, where the 2022 freeze pushes central banks toward gold. Here it is the one holding the weapon who hesitates; there, the target seeking shelter.
6 The weapon that blunts
A threat one dares not execute.
Deterrence
Brandished for three years without being fired
A weapon is worth only as long as the adversary believes it might be used. Brandished for three years without ever being fired to the end, the threat of confiscation loses its edge. Russia has already absorbed the freeze, reorganised its channels around it, and watched the Western hesitation. The immobilisation hurts, to be sure: Moscow cannot use this money. But the ultimate threat, seizure, has turned into a bluff the Union dares not call. A deterrent one never executes ends up no longer deterring, and reveals the very limit it claimed to hide.
7 The compromise
Borrow, and use only the fruit.
The middle path
Pick the fruit without cutting the tree
The chosen solution is a cautious compromise. On one side, the Union borrows 90 billion jointly, backed by the European budget. On the other, it redirects to Ukraine the windfall interest the frozen assets keep producing (already about 2.7 billion euros in the first half of 2025). In December 2025 it also decided to freeze these assets indefinitely, ending the six-month renewal that exposed the scheme to a recurring veto, and thus securing the flow of interest. It picks the fruit of the tree without cutting it: a way to help without crossing the line into confiscation.
8 The true price
The trust that underpins a reserve currency.
The underlying stake
A reserve currency is worth the safety it promises
Behind the caution lies the essential thing: trust. A reserve currency is sought because holding it seems safe, including safe from political seizure. The euro competes with the dollar precisely on this promise. Seizing the Russian reserves would give Ukraine about 200 billion once; but it could cost the euro its credibility for a long time, accelerating the diversification already under way by central banks toward gold and away from Western currencies. The Union weighs a one-off gain against a lasting reputational cost, and chooses restraint. It is less an admission of weakness than a trade-off: preserving the intangible asset that is worth, over time, far more than 200 billion.
9 Weaponized interdependence
The takeaway: a weapon that wounds the one who wields it.
The meaning of the paradox
The same network that lets you strike is the one that binds
Freezing Russia's reserves was a spectacular use of "weaponized interdependence": turning the plumbing of global finance into a weapon. The sequel reveals its limit. The same interdependence that lets you freeze is the one that binds: firing the ultimate shot, confiscation, would wound the wielder as much as the target, by destroying the trust that gives the euro its power. Europe's hesitation is therefore not mere timidity; it is the recognition that a financial weapon, unlike a military one, sabotages itself the moment it is fully used. The real question is not "will Europe dare?" but "what would be left of trust if it did?".
The compass
①
The weapon exists, but stays sheathed. 193 billion frozen, but the EU borrows 90 billion rather than seize: freezing, temporary and without transfer of ownership, is not confiscating.
②
The brake is systemic. Seizing sovereign reserves would break sovereign immunity, expose Euroclear and could drive central banks away from the euro, toward other currencies and gold.
③
The true price is trust. A reserve currency is worth the safety it promises; using it as a weapon to the end risks destroying it. This sheet sets out a debate; it does not constitute advice.
Read alongside: The reserve asset no government can freeze (the mirror: the target seeking shelter) and The insurance that blockades without a single warship (finance as a weapon). Related notion: the asset without a counterparty. Reference: abbreviations & acronyms.