The Encyclopedia of Economic Statecraft

Edition 2.0.38 / Archived entry

Central-bank reserve immobilisation and confiscation

Central-bank reserve immobilisation and confiscation are distinct forms of control over foreign official assets. Preventing transactions, segregating cash, using extraordinary revenues, securing a loan and transferring title to principal are separate operations. Their legal basis, ownership consequences and international-law questions must be examined separately. The instruments discussed here demonstrate these distinctions; they do not establish that every reserve measure is lawful or effective. [1-8]

Operational distinctions

Immobilisation restricts specified dealings without, by itself, transferring ownership. It should not automatically be called blocking: OFAC expressly distinguishes Directive 4 transaction prohibitions from blocking sanctions. Cash generated while assets are immobilised may be segregated or managed under additional rules, and revenues may be subject to tax or a contribution without transferring the underlying principal. A loan may be repaid from expected revenues, or secured on a claim for reparations, without the loan instrument itself executing confiscation. Confiscation can instead transfer title, as the US REPO Act expressly provides for funds confiscated under its authority. [1, 3-8]

Asset figures require an identified owner, custodian, jurisdiction, currency, valuation date and definition of principal or revenue. The Russian Elites, Proxies, and Oligarchs task force reported approximately USD 300 billion in Russian central-bank assets immobilised by 29 June 2022. This is a dated coalition estimate, not a current balance or an estimate of private oligarch assets. [9]

European Union measures

Council Regulation (EU) 2022/334 inserted the prohibition on transactions related to management of Central Bank of Russia reserves and assets into Article 5a of Regulation 833/2014. Regulation 2024/576 subsequently required qualifying central securities depositories to account separately for extraordinary cash balances and revenues. Recital 20 characterises those extraordinary revenues as not constituting sovereign assets. This is the EU instrument's legal characterisation, not a finding that principal has changed ownership. Regulation 2024/1469 introduced the financial contribution from specified net profits, subject to its calculation and retention rules. [2-4]

Regulation 2024/2773 established the Ukraine Loan Cooperation Mechanism and exceptional macro-financial assistance. Articles 4 and 5 provide for resources including assigned revenues and contributions to help Ukraine service the MFA loan and eligible bilateral loans. This implements the G7 Extraordinary Revenue Acceleration approach through revenues; it is not a general confiscation of reserve principal. On 1 April 2026, the Commission reported receipt the previous day of EUR 1.4 billion in windfall profits generated by interest on cash balances originating from immobilised central-bank assets. That transfer covered the second half of 2025. It is a reported revenue flow, not a principal valuation or an independent audit of receipts. [5, 10]

Council Regulation 2025/2600 temporarily prohibits direct or indirect transfers of the covered Central Bank of Russia assets and reserves and requires separate management of corresponding cash balances. Article 5 requires a Commission review by 31 December 2026 and annually thereafter. That review date is not automatic expiry. Article 6 sets cumulative conditions concerning cessation of Russia's aggression, reparations and the economic risk to the Union, and provides for Council amendment to wind down the measures. The Regulation does not itself transfer title to principal. [6]

The Ukraine Support Loan established by Regulation 2026/467 has a different structure from ERA. Article 20 provides for a limited-recourse loan, a security interest over Ukraine's claim on Russia for reparations, specified repayment triggers and a right to use immobilised Russian assets in full accordance with Union and international law. It does not record an executed transfer of those assets. A statement requested by Belgium, recorded in Council document ST 6287/1/26 REV 1 ADD 1 dated 20 February 2026, says Article 20 does not itself create the legal basis to use immobilised assets for repayment and that a future decision would require a separate legal act and mechanism. This is Belgium's recorded position, not a collective Council interpretation. [7, 11]

United States authority and its limits

Directive 4 under Executive Order 14024 prohibited specified transactions involving the Central Bank of Russia, National Wealth Fund and Ministry of Finance from February 2022. Its amended text of 19 May 2023 added reporting requirements while retaining the same transaction prohibitions. OFAC FAQ 1004 explains that these prohibitions do not themselves block the entities' assets. Separate blocking authorities, exemptions and authorisations must be considered on their own terms. [1]

The REPO for Ukrainians Act was enacted as Division F of Public Law 118-50 on 24 April 2024. As enacted, section 104(b)(1) permits the President, beginning 30 days after submission of the section 104(c) certification to the appropriate congressional committees, to seize, confiscate, transfer or vest Russian aggressor state sovereign assets subject to US jurisdiction for the Ukraine Support Fund. Section 104(b)(2) vests title to confiscated funds in the US Government, subject to statutory use limits. These provisions establish conditional domestic authority; their enactment is not proof that certification, confiscation or transfer occurred in a particular case. [8]

OFAC's section 104(a)(1) reporting instructions were issued on 23 July 2024 and published on 26 July. They required financial institutions to report specified Russian sovereign assets by 2 August 2024 or within ten days of detection, allowing reliance on qualifying prior Directive 4 or blocked-property reports. Reporting an asset is not a notice executing confiscation. [12]

Public Law 119-111, enacted on 18 September 2026, adds a relevant distinction. Section 103(e)(1) provides that US or foreign financial institutions holding immobilised Russian sovereign assets are not required to return interest earned on those assets and due to Russia. It expressly preserves the treatment of interest earned on assets of persons whose assets have been blocked. Section 103(e)(2) excludes specified payments on US, G7 or EU loans to Ukraine using proceeds of immobilised assets from sanctions imposed under that section. These are the statute's terms, not evidence that every measure was implemented. Executive Order 14436 of 16 October 2026, section 4(c), waived the application of specified sanctions provisions and restrictions, including section 103; section 4(d) leaves the waivers in effect until a further determination. Section 4(b) preserves the earlier Executive Order sanctions described there. The Act and waiver must be read together, and neither records confiscation of reserve principal. [13, 17]

Domestic authority and international legality are separate questions. The literature disputes the reach of immunity over non-judicial measures and whether countermeasures, including action by states other than the injured state, can justify restraint or appropriation. Anton Moiseienko defends the freezing measure while acknowledging disagreement over immunity; Ron van der Horst treats freezing as an immunity breach potentially justified by countermeasures. Menno T. Kamminga distinguishes reversible freezing from confiscation and argues for a possible separate lawful-measures basis for the latter. These are attributed scholarly arguments, not a judicial resolution or a settled rule that aggression automatically forfeits title. [14-16] The Bank of Russia also brought Case T-150/26 seeking annulment of Regulation 2025/2600. The Official Journal notice published on 13 April 2026 reports the action and pleas; it is not a judgment upholding those allegations. [18]

This concept review was completed on 10 November 2026. The legal claims above are tied to the identified enacted instruments and their stated scope. The reviewed EU consolidation is dated 24 July 2026 and is a documentary aid; the original acts and later instruments govern. The REPO paragraph describes the 2024 enactment, with the separately verified 2026 statutory provisions and October waiver above. Neither a statutory power, a political statement nor a bounded search certifies every later implementation measure or an executed confiscation. The historical asset and revenue amounts are not relabelled current. Legal texts and official announcements do not by themselves measure coercive success, reserve substitution or the monetary costs of these policies.

Entry architecture

This entry remains a concept. The European Union immobilisation and extraordinary-revenues regime, the United States REPO for Ukrainians Act, and any executed confiscation authority require separate legal analysis. The Coalition immobilisation of Central Bank of Russia reserves (2022-present) is a distinct case. The quarterly review cadence remains in force, alongside the separate 31 December 2026 EU review-report watch.

See also

Sovereign immunity of central bank assets · Coalition immobilisation of Central Bank of Russia reserves (2022-present) · Use of extraordinary revenues from immobilised Russian sovereign assets and G7 ERA loans (2024-present) · REPO for Ukrainians Act (2024) · De-dollarisation as backlash dynamic · Economic statecraft

Sources

  1. Office of Foreign Assets Control, Directive 4 under Executive Order 14024: Prohibitions Related to Transactions Involving the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, and the Ministry of Finance of the Russian Federation, amended 19 May 2023, including footnote 1 on the 28 February 2022 version; and FAQ 1004. Full texts retrieved 9 November 2026 and reused with that access date.Return 1
  2. Council of the European Union, Council Regulation (EU) 2022/334 of 28 February 2022 amending Council Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine, OJ L 57 (28 February 2022), pp. 1-3, Article 1(3); and Regulation 833/2014, consolidation dated 24 July 2026, Article 5a. Accessed 10 November 2026.
  3. Council of the European Union, Council Regulation (EU) 2024/576 of 12 February 2024 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine, OJ L, 2024/576 (14 February 2024), recital 20 and Article 1. Full text accessed 10 November 2026.
  4. Council of the European Union, Council Regulation (EU) 2024/1469 of 21 May 2024 amending Regulation (EU) No 833/2014 concerning restrictive measures in view of Russia's actions destabilising the situation in Ukraine, OJ L, 2024/1469 (22 May 2024), Article 1. Full text retrieved 9 November 2026 and reused.
  5. European Parliament and Council, Regulation (EU) 2024/2773 of 24 October 2024 establishing the Ukraine Loan Cooperation Mechanism and providing exceptional macro-financial assistance to Ukraine, OJ L, 2024/2773 (28 October 2024), recital 7 and Articles 4-6. Full text retrieved 9 November 2026 and reused.Return 1
  6. Council of the European Union, Council Regulation (EU) 2025/2600 of 12 December 2025 on emergency measures addressing the serious economic difficulties caused by Russia's actions in the context of the war of aggression against Ukraine, OJ L, 2025/2600 (13 December 2025), Articles 2, 5-7. Full text and in-force status accessed 10 November 2026.Return 1
  7. European Parliament and Council, Regulation (EU) 2026/467 of 24 February 2026 implementing enhanced cooperation on the establishment of the Ukraine Support Loan for 2026 and 2027, OJ L, 2026/467 (26 February 2026), Articles 20 and 24. Full text and in-force status accessed 10 November 2026.Return 1
  8. United States Congress, Rebuilding Economic Prosperity and Opportunity for Ukrainians Act, Public Law 118-50, Division F (24 April 2024), section 104, 138 Stat. 947-951. Enacted full text accessed 10 November 2026.Return 1
  9. United States Department of the Treasury, Russian Elites, Proxies, and Oligarchs Task Force Joint Statement (29 June 2022). Official announcement accessed 10 November 2026.Return 1
  10. European Commission, EU to deliver EUR 1.4 billion in revenue from immobilised Russian assets to be used in support of Ukraine (1 April 2026). Official announcement accessed 10 November 2026.Return 1
  11. Council of the European Union, Statement by Belgium for the Council minutes concerning the Ukraine Support Loan, ST 6287/1/26 REV 1 ADD 1 (20 February 2026), p. 1. Descriptive title; full text accessed 10 November 2026.Return 1
  12. Office of Foreign Assets Control, Notice of Reporting Instructions Under the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act, Federal Register 89, no. 144 (26 July 2024), 60568-60569, instructions issued 23 July 2024. Full text accessed 10 November 2026.Return 1
  13. United States Congress, Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, Public Law 119-111, Division A (18 September 2026), section 103(e), 140 Stat. 1035. Enacted full text accessed 10 November 2026.Return 1
  14. Anton Moiseienko, Legal: The Freezing of the Russian Central Bank's Assets, European Journal of International Law 34, no. 4 (2023), pp. 1007-1020, DOI 10.1093/ejil/chad050, especially conclusion, p. 1019. Open journal full text checked 10 November 2026.
  15. Ron van der Horst, Illegal, Unless: Freezing the Assets of Russia's Central Bank, European Journal of International Law 34, no. 4 (2023), pp. 1021-1031, DOI 10.1093/ejil/chad053, section 3. Open journal full text checked 10 November 2026.
  16. Menno T. Kamminga, Confiscating Russia's Frozen Central Bank Assets: A Permissible Third-Party Countermeasure?, Netherlands International Law Review 70, no. 1 (2023), pp. 1-17, DOI 10.1007/s40802-023-00231-7, sections 5-6; published online 18 April 2023. Open publisher full text checked 10 November 2026.
  1. President of the United States, Executive Order 14436: Implementing the Lindsey O. Graham Sanctioning Russia and Iran Act of 2026, signed 16 October 2026, Federal Register 91, no. 202 (21 October 2026), 66627-66630, sections 4(b)-(d). Published full text checked 10 November 2026.Return 1
  2. General Court, Action brought on 27 February 2026, Bank of Russia v Council, Case T-150/26, OJ C, C/2026/2053 (13 April 2026). Procedural notice, not a decision on the merits; full text checked 10 November 2026.Return 1

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