EU clearinghouse Euroclear accrued €1.6 billion ($1.7 billion) in interest from frozen Russian assets in just three months of this year, its CEO Valerie Urbain has revealed. She warned however, that tapping the funds would have a severe impact on global financial markets.   

The EU is expected to make a decision granting Kiev €2-3 billion in revenue generated by the Russian assets “in the coming weeks,” Urbain said in an interview with the Belgian news outlet L’Echo. Brussels previously suggested seizing the profits to buy weapons for Ukraine rather than using the funds for reconstruction, as had been initially planned.   

Euroclear, a key intermediary on EU financial markets, has over €200 billion in Russian securities blocked in its accounts, according to company data. Over the past year those accounts have accrued nearly €4.4 billion in interest. The windfall tax on the profits is expected to be between 87% and 89%, according to Urbain.  

The seizure of the interest income would raise a “question of legal certainty” and have a “very negative impact” not only on Euroclear, but on financial markets worldwide, she warned.   

“If our clients feel that the law is no longer respected and that their assets may be confiscated, this opens a Pandora’s box,” Urbain told L’Echo. “This could lead large international investors to turn away from Europe.”  

Euroclear, one of world’s largest providers of cross-border settlements, which holds some €37 trillion in assets, has long opposed Brussels’ plans to tap frozen Russian funds, and its shareholders support that position, Urbain noted. The income linked to Russian activity “must be retained and must not be distributed,” she insisted.  

The US had been pushing for the outright seizure of the underlying assets in order to fund Ukraine’s government, but has shifted towards taking only the interest amid resistance from France, Germany and the ECB, who worry that the euro could be affected if countries such as China start repatriating their massive foreign reserves as a precaution against their possible confiscation in the future.  

Officials from G7 states privately said that full confiscation is no longer on the agenda despite Ukrainian demands, Financial Times reported last week.  

Russia has said that any action taken against its assets would amount to theft and violate international law.