The European Central Bank reportedly has refused to serve as a financial backstop for a massive EU “reparations loan” to Ukraine, a decision that undercuts Brussels’ plan to raise roughly $140 billion against frozen Russian central bank assets held at Euroclear in Belgium.
According to multiple officials cited by the Financial Times, the ECB concluded that a European Commission proposal would violate the central bank’s mandate and run afoul of EU treaty rules barring “monetary financing,” the practice of central banks effectively funding government obligations.
The ECB warned that such actions are prohibited because they can undermine confidence in a central bank and contribute to inflation and instability.
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