The European Central Bank (ECB) has refused to back a €140 billion payout to Ukraine secured by Russian assets frozen at the Belgian depository Euroclear.
The Financial Times reported the development, citing sources, Hvylya writes.
The ECB reportedly concluded that the European Commission's proposal violates its mandate.
Four sources said officials asked the central bank to act as a lender to Euroclear to prevent a liquidity crisis.
However, according to three sources, the ECB ruled this out, concluding that the Commission's proposal amounted to direct financing of governments, as the regulator would be covering member states' financial liabilities.
The European Commission developed backup options following the regulator's objections. According to two FT sources, the new proposals involve €140 billion in temporary financing to support lending.
Belgium opposes using blocked Russian funds to provide loans to Ukraine. Belgian authorities are convinced that the "reparation lending" model pushed by the Commission is flawed from the outset and ignores concerns previously raised by Belgium.
We previously reported that Belgium had been accused of playing into Putin's hands regarding funds for Ukraine.
