The European Union's plans to consider the possibility of seizing frozen Russian assets have become a new point of tension in the international financial system. Economists warn that such steps can shake confidence in the euro as one of the world's key reserve currencies. Currently, about a fifth of global foreign exchange reserves are denominated in European currency, and this status is based on the assumption of the reliability of European institutions and the protection of property rights.
If the EU decides to move from discussions to a real confiscation mechanism, the risks for the euro may manifest themselves in several directions at once. Central banks, especially in the Middle East and Asia, may reconsider the volume of investments in European debt instruments, fearing a repetition of precedents. Private investors will also take a closer look at legal guarantees and political stability, which may lead to the demand for increased yields on European bonds — the so-called geopolitical premium.
Experts note that the attractiveness of the euro as a reserve currency has always been based on respect for property rights, transparency of the judicial system and predictability of decisions of European structures. Any deviation from these principles automatically triggers a risk reassessment process. Representatives of investment funds emphasize that, in an effort to create a "safe haven", the EU should avoid steps that look like political interference in private assets.
Nevertheless, despite the doubts of market participants, support for the idea of divesting Russian assets is gradually growing within the EU. Several factors influenced the change in the positions of individual states: the increased need to find sources of financing for Ukraine, confidence in the legal elaboration of the scheme, as well as active negotiations with international investors, to whom European officials are trying to guarantee the safety of their investments.
However, the European Central Bank remains cautious and warns of possible consequences, including a long-term weakening of confidence in the euro as a reference currency. In the face of increasing competition from the dollar, yuan and new financial instruments, any reputational risks may reduce the share of the euro in global reserves.
The situation shows that the decision to withdraw assets goes far beyond a political issue and can change the balance of power in the global foreign exchange market. What exactly the reaction of states and large foundations will be will become clear only after the final decisions of the EU.
