The EU appears close to agreeing on a loan for Ukraine, backed by frozen Russian assets, that would be repaid by eventual reparations. This Focus explores the macroeconomic implications. The short point is that it allows the EU to provide large amounts of financing to Ukraine without ostensibly shouldering the burden. However, EU governments could still be on the hook for the loan in the – to us, quite likely – scenarios where the war continues for some time or ends without Russia agreeing to reparations.
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