NextFin news, On Thursday, September 11, 2025, in Brussels, the European Commission presented a new proposal to deputy finance ministers on how to channel billions of euros in frozen Russian assets to Ukraine. The plan involves replacing direct cash transfers with EU-backed promissory notes, or zero-coupon bonds, to avoid legal risks associated with confiscating Russian capital.
According to four officials familiar with the matter, the proposal was described as "legally creative" and aims to unlock significant additional funding for Ukraine's military and reconstruction efforts without technically expropriating the frozen Russian assets themselves. The idea was met with cautious enthusiasm, but no formal agreements or commitments were reached during the closed-door meeting.
Nearly 200 billion euros of Russian assets have been frozen since Moscow's full-scale invasion of Ukraine in February 2022. Most of these assets are held by Euroclear, a financial institution based in Brussels. Under current rules, any maturing assets must be transferred to a deposit account at the European Central Bank (ECB), which accrues interest on the cash held.
Until now, the European Union has used the interest generated from these deposits to repay its share of a 45 billion euro G7 loan to Ukraine, which is expected to be fully paid off soon. However, with Ukraine facing an estimated budget deficit of around 8 billion euros next year, EU countries are exploring new ways to continue funding the war-torn country amid constrained domestic budgets.
The Commission's plan proposes exchanging the cash deposits linked to the frozen assets for short-term zero-coupon EU bonds jointly guaranteed by EU member states. This mechanism would allow Ukraine to receive immediate funding while committing to repay the loan only after Russia pays war reparations, as stated by European Commission President Ursula von der Leyen.
Belgium and Euroclear have previously warned that using the frozen assets directly to issue loans could trigger significant legal disputes. The new approach seeks to circumvent these issues by avoiding direct confiscation of the assets.
The proposal was presented behind closed doors in Brussels on Thursday, September 11, 2025. While it has not yet been formally approved, officials indicated that an official proposal could be issued soon. Other options for utilizing the frozen Russian assets remain under consideration.
This initiative follows recent calls by European Commission President Ursula von der Leyen for urgent development of new mechanisms to fund Ukraine's military efforts using proceeds from frozen Russian assets. Meanwhile, some EU member states, including Belgium, have expressed firm opposition to direct confiscation of these assets.
Sources for this report include Politico, Ukrainska Pravda, RBC-Ukraine, Interfax-Ukraine, and Adevarul, all reporting on developments as of Saturday, September 13, 2025.
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