The Financial Times warned in a report on Saturday that the potential confiscation of Russia’s frozen assets in the European Union could severely undermine the euro’s position as a global reserve currency.

According to the report, several investment-fund managers caution that any move to use the frozen assets would increase political risks associated with holding euro-denominated assets and could even cast doubt on their status as a global safe haven.

The report notes that euro-based assets account for about 20% of foreign-exchange reserves held by central banks around the world.

In this regard, the euro ranks second after the US dollar, which makes up around 60% of global foreign-exchange reserves.

However, if the EU decides to confiscate Russia’s frozen assets, central banks and private investors may begin to question whether purchasing European securities remains a sound decision.

Meanwhile, the newspaper added that although the European Central Bank has expressed skepticism about the plan to confiscate the assets and has emphasized its risks, some EU member states that had long opposed such a move have now shifted their position and are supporting it.

Source: Tasnim News Agency