Page 14 - RusRPTApr24

Why is it such a big deal? Because sovereign continuity is considered fundamental in the rule-based global order, with the only permitted exception for outright confiscation being for sovereigns that are officially at war with each other.
3/ Reputational issues
It's worth noting that while the assets are widely reported to be situated at Euroclear, in reality, this obscures the fact that Euroclear is merely their custodian. The assets are, according to sources familiar with the situation, mostly sovereign bonds that have been pledged as collateral to the Bundesbank. The corresponding euro liquidity remains frozen on account. If that is true, this explains why the ECB is among the staunchest of opponents to the seizing, and why the Germans in particular are so against the move.
The optics of the Bundesbank, of all the central banks in the world, doing the seizing provides Russia with a highly exploitable propaganda narrative. Not just that the West can't be trusted to preserve sovereign immunity and property rights, but that the Germans are up to their old WW2 tricks in terms of unfairly seizing assets.
But more pertinently, the seizing would skewer any hopes the euro has of surpassing the dollar as the world's top international reserve currency.
On the flipside, defying US/UK pressure to seize the assets could be the making of the euro.
4/ Bitcoin's raison d'etre moment?
ECB Policymakers will also be acutely aware that seizing Russian assets will build the market and sovereign case for holding reserves in alternative assets like gold, but also (following in the footsteps of El Salvador) bitcoin.
It's worth noting, the National Bank of Poland, one of the biggest champions of seizing the Russian assets, has been aggressively moving more and more of its reserves into gold since the war broke out. More broadly, central banks have been among the biggest net buyers of gold the past year.
Could gold and bitcoin highs be benefiting from such repositioning? I wouldn't discount it.
14 RUSSIA Country Report April 2024 www.intellinews.com