U.S Treasury Secretary, Janet Yellen has voiced support for the idea of liquidating frozen Russian Central Bank assets and using them for Ukraine’s long-term reconstruction.
She stated that it is “necessary and urgent for our coalition to find a way to unlock the value of these immobilized assets to support Ukraine’s continued resistance and long-term reconstruction.”
Yellen made these remarks in Sao Paulo, Brazil, where Group of 20 finance ministers and central bank Governors are meeting this week.
“I believe there is a strong international law, economic, and moral case for moving forward. This would be a decisive response to Russia’s unprecedented threat to global stability.”
Janet Yellen
The idea of using Russia’s frozen assets has gained traction lately as continued allied funding for Ukraine becomes more uncertain and the U.S. Congress is in a stalemate over providing more support.
The United States and its allies froze hundreds of billions of dollars in Russian foreign holdings in retaliation for Moscow’s invasion of Ukraine.
Those billions have been sitting untapped as the war grinds on, now in its third year, while officials from multiple countries have debated the legality of sending the money to Ukraine.
More than two-thirds of Russia’s immobilized central bank funds are located in the EU.
Using the assets to help Ukraine “would make clear that Russia cannot win by prolonging the war and would incentivize it to come to the table to negotiate a just peace with Ukraine,” Yellen said.
Earlier this month, the European Union passed a law to set aside windfall profits generated from frozen Russian central bank assets. Yellen called it “an action I fully endorse.”
Yellen said the United States and its Group of Seven allies, would continue to act to restrict Russia’s access to materials and money needed to wage its war against Ukraine.
“(Russian President Vladimir) Putin’s strategy is hoping he can simply wait out Ukraine and its allies. We must prove him wrong and show the Kremlin that we will collectively stand with Ukraine for as long as it takes.”
Janet Yellen
Options For Russian Assets Being Evaluated
Moreover, Yellen said that the U.S. and its allies were evaluating different options for the Russian assets immobilized in 2022 and the associated risks.
G7 leaders have asked for solutions to be presented in June.
Yellen acknowledged there were risks involved, but downplayed concerns raised by some in Europe that confiscating Russian assets would undermine the role of the U.S. dollar, euro or Japanese yen as important global reserve currencies.
Yellen asserted that it is “extremely unlikely” that tapping the frozen funds would harm the dollar’s standing in the global economy “especially given the uniqueness of the situation where Russia is brazenly violating international norms.”
“Realistically there are not alternatives to the dollar, euro and yen,” Yellen said.
She expressed belief that the G7 should work together to explore the number of approaches that have been suggested for unlocking their economic values.
“One would be, of course, seizing the assets themselves, but there are other ideas, such as using them as collateral to borrow from global markets,” Yellen said.
She asserted that any action would be taken in coordination.
“It’s important for the G7 to work together. We need to find a way that is legal, both domestically in all of our countries and also in accordance with international law,” she said.
“We don’t have a preferred strategy for how to do this. We want the G7 and our allies to act together,” she added.
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