Published by Global Banking and Finance Review
Posted on October 14, 2025
3 min readLast updated: January 21, 2026
The EU's plan to use frozen Russian assets for Ukraine may boost central bank gold buying, with implications for global reserves and financial strategies.
By Polina Devitt
LONDON (Reuters) -The European Commission's proposal to tap frozen Russian state assets for financial aid to Ukraine is rattling some central banks, which could further accelerate gold purchases for storage outside Western jurisdictions, analysts say.
The Commission's plan would allow EU governments to use up to 185 billion euros ($214 billion) of Russian sovereign assets currently frozen in Europe without confiscating them - a red line for many countries and the European Central Bank.
China and some developing countries have already been diversifying their reserves away from Western currencies and government debt into gold after sanctions linked to the Ukraine war froze $300 billion of Russia's foreign currency reserves.
"The EU can mince words as much as they like, but it does not change the reality," veteran gold industry analyst and former bullion dealer Ross Norman said.
"The effect is the same - Russia has been denied access to its own money. Central bankers around the world know this and they are acting accordingly. And that is acquiring more gold."
CENTRAL BANKS BUYING MORE THAN 1,000 TONS A YEAR SINCE 2022
Central banks' annual net gold purchases since 2022 have been more than double the average of the previous five years, consultancy Metals Focus says, topping 1,000 tons a year. That helped push prices to record highs above $4,000 an ounce this month.
Metals Focus forecasts further purchases of a net 900 tons this year.
With stronger buying and bullion's price growth, gold overtook the euro as the second biggest reserve asset in 2024 after the U.S. dollar, an ECB report showed in June. The value of central banks' bullion holdings is now higher than that of U.S. Treasury bonds.
China - which has never officially commented on its reasons for buying gold - has been adding gold to its reserves for 11 months. Poland has been buying gold as well, but for a different reason, with war in neighbouring Ukraine a risk to its economy.
"Because gold is no one's liability and nobody's debt, its appeal is shining for central banks worried about the political security of their reserves," said Adrian Ash, head of research at online marketplace BullionVault.
If the EU does tap frozen Russian state assets to help provide financial aid to Ukraine, it is "very possible" central bank gold purchases will accelerate, he said.
COUNTRIES ALSO REPATRIATING GOLD RESERVES
Measures taken against Russia also sparked an increase in the number of countries repatriating gold reserves away from Western hubs, with 68% of respondents in a 2023 Invesco survey keeping gold reserves at home compared to 50% in 2020.
"The EU can only use frozen Russian assets because it has access to them, i.e. they are booked/stored with banks outside of Russia," said Julius Baer analyst Carsten Menke.
"Emerging market central banks could opt to store the assets at home," Menke said.
In Germany, U.S. President Donald Trump's confrontations with allies over trade and his criticism of the Federal Reserve revived some calls for gold repatriation this year. The Bundesbank has said the New York Fed remains a trustworthy partner for its gold storage.
($1 = 0.8654 euros)
(Reporting by Polina Devitt; Additional reporting by Ashitha Shivaprasad; Editing by Pratima Desai, Veronica Brown and Jan Harvey)
A central bank is a financial institution responsible for managing a country's currency, money supply, and interest rates, often overseeing monetary policy and regulating the banking system.
Gold as a reserve asset refers to gold held by central banks and financial institutions as part of their reserves, which can be used to back currency and stabilize the economy.
Repatriation of gold refers to the process of returning gold reserves to a country's own central bank or storage facilities, often for security or strategic reasons.
Emerging markets are economies that are in the process of rapid growth and industrialization, often characterized by increasing investment opportunities and developing financial markets.
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