(MENAFN) The European Central Bank (ECB) has declined to back a proposed €140 billion payout to Ukraine using frozen Russian assets stored at Belgium’s Euroclear, as reported by a media outlet on Tuesday, which cited officials familiar with the negotiations.

The ECB concluded that the European Commission’s plan lies beyond its authority, the newspaper reported.

For several months, the EU has been exploring ways to access frozen Russian central bank reserves to support a €140 billion ($160 billion) “reparations loan” for Kiev. Belgium, where roughly $200 billion of these assets are kept at the privately-owned Euroclear clearinghouse, has repeatedly cautioned that the plan could trigger legal disputes and financial risks if pursued.

Under the European Commission’s proposal, governments of EU member states would provide state guarantees to help share the repayment risk of the loan for Ukraine.

However, Commission officials have warned that member states might struggle to mobilize funds quickly during an emergency, potentially creating tensions in financial markets.

EU authorities reportedly asked the ECB whether it could serve as a lender of last resort to Euroclear Bank, the lending arm of the Belgian depository, to prevent a liquidity shortage.

ECB officials informed the Commission that this was not feasible, the media outlet reported, citing sources familiar with the discussions.

“Such a proposal is not under consideration as it would likely violate EU treaty law prohibiting monetary financing,” the ECB stated.

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