Reparation bonds could unlock $300 billion for Ukraine
As the US and the EU are struggling to keep writing cheques to Ukraine, a fallback plan is making its way: Kyiv could raise money by selling bonds backed by future claims for war damages against Moscow. It would be better if Ukraine’s backers just gave it more cash, as the United Kingdom did last week. But elsewhere fatigue is setting in. US President Joe Biden has so far failed to persuade Congress to approve a new $61 billion package for Kyiv. Meanwhile, Hungary blocked the EU’s planned €50 billion in aid last month, although other member states are determined to find a way round the problem.
Efforts to seize Russia’s frozen assets are also making slow progress. Not only are lawyers arguing whether confiscation would be legal. Politicians wonder whether it would be wise, though they are actively exploring doing so, according to the Financial Times.
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WNU Editor: I have heard of a lot of crazy financial deals and proposals in my life, but this one is by far one of the craziest.
The U.S. and Ukrainian proposal basically says it is permissible to use as collateral another country’s assets (without their permission) to fund your own bonds and
securities. But it gets even more crazier than that. Since no private lender is going to buy such “reparations bonds” whose assets have been stolen from another party, the solution is to then force Western central banks to buy them.
Here is an easy prediction. If implemented this will put the final nail in the coffin in the US dollar being used as the world’s reserve currency.