Immobilization of central bank reserves
A ban on financial intermediaries carrying out any transaction involving a foreign central bank's reserves, which remain the property of the targeted state but can no longer be used.
Asset freezes usually target designated individuals and companies. Immobilizing a central bank's reserves goes further: it cuts a country off from its foreign exchange reserves held abroad, at the moment it most needs them to defend its currency and pay its debt. It runs into the immunity from execution of central bank assets, which most national laws protect strictly, hence its character as immobilization rather than confiscation: the assets remain the targeted country's property. The debate then turns to the income those assets generate at the depository, which the sanctioning countries can tax or earmark. For investors and insurers exposed to the sanctioned country, the measure almost always prompts countermeasures aimed at their own assets there.
On February 28, 2022, the European Union, the United States and their allies banned all transactions with the Central Bank of Russia, immobilizing about 300 billion dollars of reserves, most of it at the Belgian depository Euroclear. In October 2024, the G7 finalized 50 billion dollars of loans to Ukraine, repaid from the windfall profits generated by those assets. Moscow responded by placing Western assets under temporary administration.
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