The European Central Bank (ECB) has rejected a proposal to back a €140 billion payment to Ukraine, casting doubt on the European Union’s plan to create a “reparations loan” using frozen Russian assets, the Financial Times reported on Tuesday.

According to multiple officials cited by the newspaper, the ECB concluded that the European Commission’s proposal violated its mandate, adding a significant hurdle to Brussels’ efforts to raise the loan against Russian central bank assets currently immobilized at Euroclear, the Belgian securities depository.

Tensions have emerged between EU member states over the plan, with several governments accusing Belgium of demanding excessive protection in case the Kremlin initiates legal action over the deployment of €140 billion in frozen Russian assets. Belgian Prime Minister Bart De Wever is reportedly insisting on financial guarantees exceeding the full value of the assets and demands that these guarantees remain in place beyond the duration of EU sanctions on Russia.

European governments wary of 'blank check'

Other European governments are wary of committing to what they describe as a “blank check", citing the risk that court rulings could expose them to billions in repayments long after the war in Ukraine ends. Four EU diplomats told POLITICO that they cannot accept Belgium’s demands, noting the potential impact on their countries’ financial stability.

The European Commission is racing to finalize the legal framework for the loan ahead of a key EU summit in mid-December, aiming to prevent Ukraine’s war chest from running dry by April. In a bid to secure political support, the Commission has shared portions of its draft proposal with EU ambassadors, leaving the specific amount of guarantees blank.

If negotiations stall, the alternative could be issuing additional EU debt to cover Ukraine’s budget shortfall, though this option faces resistance among member states due to concerns about using taxpayer funds.

In September 2025, the European Commission (EC) proposed a novel funding mechanism: a roughly €140 billion loan to Ukraine, secured against the sovereign assets of Russia that had been frozen by the EU and its allies.

These funds are mainly held at the Belgian securities depository Euroclea, cash balances derived from matured Russian bonds that were immobilized after the war in Ukraine broke out in February 2022.

Under the plan, Euroclear would transfer the frozen‑asset cash to the Commission. The Commission, in turn, would issue the €140 billion loan to Ukraine. Repayment would be contingent: Ukraine would repay only if, and when, Russia pays war reparations for damages caused during the conflict.

The remaining portion of the frozen‑asset pool would be used to back an existing support package for Ukraine, leaving about €140 billion earmarked for the “reparations loan".