The European Commission has proposed utilizing frozen Russian state funds to secure a €140 billion loan for Kiev, according to reports. European Central Bank President Christine Lagarde emphasized that any EU initiative involving these assets must adhere to international law, stating the institution is closely monitoring the process.

The plan, under discussion by EU leaders, aims to bypass legal challenges by investing blocked Russian funds into euro-denominated bonds. Proceeds from these bonds would then be directed toward a “reparations loan” for Ukraine. Lagarde reiterated that such measures must comply with international rules and prioritize financial stability, warning that legally contentious actions could harm the euro’s credibility and deter investment.

The scheme faces scrutiny over its legal framework, as frozen Russian assets—held by entities like Belgium’s Euroclear—amount to approximately $300 billion. Lagarde stressed the need for consensus among jurisdictions holding these assets before further steps are taken. While some EU members have expressed concerns about the risks, others have already transferred over a billion dollars in interest payments to Ukraine.

Belgian Prime Minister Bart De Wever and French President Emmanuel Macron have raised objections, citing legal and reputational risks. Meanwhile, Russian officials denounced the plan as “theft,” threatening legal action against those involved.