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reutersplainin | How the West might use Russia's frozen reserves, 12 Mar fiduciary duties
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CONFISCATION
Some international policymakers and lawyers say the immobilised Russian reserves property can simply be confiscated under a doctrine of international law known as "countermeasures". The assets would then be sold or collateralised and the [sale or loan] proceeds handed transferred to Ukraine or to a dedicated reconstruction fund....in the United States, leading sovereign debt [asset?] experts have highlighted, that the International Emergency Economic Powers Act [50 USC Ch. 35] does not authorise an outright confiscation of frozen Russian property in the absence of actual armed conflict between the U.S. and Russia.
[..]
SIPHON OFF PROCEEDS
[O]f the nearly 210 [?] billion euros ($230 billion) of Russian reserves locked in the EU—essentially bonds and other types of securities in which the Russian central bank had invested—are held in a Brussels-based ["Eurosystem Collateral Management System"] called Euroclear.
wut
When those assets bonds reach their final pay[ment] day—or "matur[ity date]", in banker speak—they get converted [?] into cash, a transaction that is taxed at a rate of 25% in Belgium.
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Some lawyers also point out that, legally, there is little difference between siphoning off the maturity revenues < wipes tears > and grabbing the full [principal deposit amount] $300-350 [?] billion. There is the risk that Russia could, through court action, try and seize Euroclear [sic] cash in securities depositories < wipes tears > in Hong Kong, Dubai, and elsewhere. The worry is that this could drain Euroclear capital and require a huge bail-out. There are plans therefore to set aside [immobilise?] some of the siphoned-off money [into] a < wipes tears > safety net [reserve account?].
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REPARATION BONDS
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SYNDICATED LOAN
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DICTION CORNER
n. siphon or syphon; v. to siphon; preposition uses
reutersplainin | ["]EU-frozen["] Russian assets to generate 15-20 bln until 2027, EU official says, 12 Mar the syphon and preposition preparations
Part of the profits as well the tax on the gross amount [are] likely to be transferred from the EU to Kyiv on a regular basis, but some of the money will have to stay in the West Price Cap Coalition treasuries to build a < wipes tears > buffer against the expected Russian retaliation litigation which could destabilise the global financial system, the official said.
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"The moment the war ends and all settlements can be made, all the money that was provisionally retained will also be transferred [from WHERE?] to Ukraine. But we need a significant amount in Euroclear...beause Euroclear ["the syphon"] will face a lot of [clients' deposit withdrawal] claims," the official said.
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"That's the mechanism how Euroclear could be totally emptied, basically," the senior EU official said. If Euroclear were to run out of [return clients'] capital, the Belgian central bank would have to withdraw its licence, likely causing a global financial crisis because Euroclear has [total clients'] assets in custody of 37 trillion euros, the official said.
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The Commission is to present a proposal next week on how much of profits [Russian capital gains] over the next four years [Euroclear agents] can immediately [transfer] to Ukraine and in what form, and how much should be kept [immobilised?] to create the safety ["net"] buffer. There should also be an emergency mechanism should Euroclear get in trouble, the official said. Belgium, which taxes the profits that Euroclear makes on the Russian cash at 25%, expects to get 1.7 billion euros in tax from that in 2024 of which 1.5 billion will be sent to Kyiv this year and the rest in 2025, the official said.
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by Cat on Wed Mar 13th, 2024 at 07:22:57 PM EST
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