The European Union is discussing a plan to provide the government of Ukraine with income from Russian capital and resources in the amount of 196.6 billion euros, which are tied to the global financial system, the Financial Times reports.

For its disclosure, the British newspaper cited sources familiar with the process, whom it did not name.

Officials from member states and the European Commission met Wednesday to explore options for generating revenue from Russian assets held by Euroclear, the world’s largest clearing house, according to people familiar with the matter.

Such a move would not result in the expropriation of the assets themselves, the paper said, but would escalate Western economic pressure on Russia to help Kyiv defend itself from Vladimir Putin’s war.

The sanctions froze Russian assets in Euroclear worth 196.6 billion euros, according to the Belgian government, of which 180 billion euros are assets of the Russian central bank.

Assets generate cash through coupons and redemptions that are locked up for up to a year.

This money is reinvested by Euroclear, and it is the profit received from reinvestment that EU officials are interested in sending to Ukraine.

As a standard practice, Euroclear lends money to its customers in order to minimize credit risk and keep the interest earned. Today’s high interest rate environment, coupled with an unusual backlog in fines, has generated significant profits for the clearinghouse. Euroclear reported that in the first quarter of this year interest in the amount of 734 million euros in cash from assets seized by Russia.

“It’s not entirely clear who owns these profits,” said a source familiar with the discussions. Taking advantage of Ukraine’s interests was “uncharted territory,” the source said, “but we believe it can be done.”

Some officials believe the principle could be applied to a wider range of frozen Russian assets, including those stuck in Clearstream’s Luxembourg home.

Another person familiar with the matter said that “financial institutions don’t know what to do with this money” and that the option of diverting profits to help Ukraine looks promising.

However, some warned that the legal implications are yet to be considered and such a move is likely to require greater international support as it could affect financial markets. Euroclear held securities for 35.6 trillion. euro in 2022.

The EU is also considering actively managing revenue to create more money, people said. This can be done through the asset manager or through Euroclear itself, which will invest the assets as directed.

Source: Financial Times, RES-IPE.