On 12 February, the Council of the European Union adopted a decision and a regulation clarifying the obligations of Central Securities Depositories (CSD) holding assets and reserves of the Central Bank of Russia (CBR) that are immobilised as a result of EU’s restrictive measures.

After Russia launched its full-scale invasion of Ukraine in February 2022, the EU, in coordination with international partners, decided to prohibit any transactions related to the management of reserves as well as of assets of the CBR. As a result, the relevant assets held by financial institutions in the EU member states were immobilised.

The Council’s decision, in line with G7 position, clarifies the prohibition of those transactions as well as the legal status of the revenues generated by the CSDs in connection with the holding of Russian immobilised assets and sets clear rules for the entities holding them. The Council decided in particular that CSDs holding more than €1 million of CBR’s assets must account for extraordinary cash balances accumulating due to EU restrictive measures separately and must also keep corresponding revenues separate. In addition, CSDs shall be prohibited from disposing of the ensuing net profits.

In view of the risks and costs related to holding of the assets and reserves of the Central Bank of Russia, each central security depository may request its supervisory authority to authorise a release of a share of those net profits in view of complying with statutory capital and risk management requirements.

This decision paves the way for the Council to decide on a possible establishment of a financial contribution to the EU budget raised on these net profits to support Ukraine and its recovery and reconstruction at a later stage. This financial contribution may be channelled through the EU budget to the Ukraine Facility on which the Council and the European Parliament reached a provisional agreement on 6 February 2024.

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Press release