Euroclear
Based on Wikipedia: Euroclear
The Vault That Holds a Nation's Ransom
Somewhere in Brussels, inside a financial institution that most people have never heard of, sits roughly two hundred billion dollars of Russian money. It cannot move. It cannot be withdrawn. It has been frozen solid since February 2022, when Russia invaded Ukraine and the world decided to lock the Kremlin out of its own savings account.
The institution holding this frozen fortune is called Euroclear. And to understand why Russia's central bank reserves ended up trapped in Belgium of all places, you need to understand what a central securities depository actually does—and why these obscure financial utilities have become some of the most powerful choke points in the global economy.
What Happens After You Buy a Stock
When you purchase a share of stock or a bond, you probably think of it as a simple transaction. You click a button, money leaves your account, and you own something new. But behind that click lies an elaborate choreography that most investors never see.
The process is called settlement—the actual exchange of money for securities. And it is far more complicated than it sounds.
Imagine you buy a German government bond. The seller needs to receive your payment. You need to receive proof that you now own that bond. But you and the seller might be on opposite sides of the planet, using different banks, operating under different legal systems. How do you ensure that neither party cheats? That the bond actually exists? That the money actually arrives?
This is the problem that central securities depositories solve. A central securities depository, or CSD, is essentially a massive vault—not for physical certificates, which barely exist anymore, but for the electronic records of who owns what. When securities change hands, the CSD updates its books. It is the source of truth for ownership.
Think of it like a land registry, but for financial assets. Just as a government registry records who owns which parcels of real estate, a CSD records who owns which stocks and bonds. Without it, financial markets would dissolve into chaos and fraud.
The Eurobond Problem
Euroclear emerged from a specific problem in the late nineteen sixties. At the time, a new kind of debt instrument was gaining popularity: the eurobond.
Despite the name, eurobonds have nothing to do with the European Union or the euro currency, neither of which existed at the time. The "euro" prefix simply meant that these bonds were issued outside the home country of the currency they were denominated in. An American company might issue dollar-denominated bonds in London, for example. This let issuers avoid domestic regulations and tap into the growing pools of dollars held overseas.
But eurobonds created a settlement nightmare. These securities existed in a kind of international limbo, outside any single country's financial infrastructure. When someone in London sold a eurobond to someone in Zurich, there was no obvious authority to record the transaction.
Morgan Guaranty Trust Company—a predecessor of what is now JPMorgan Chase—saw an opportunity. In July 1967, the bank's Belgian branch launched a pilot settlement service in Brussels to handle eurobond trades. By December 1968, this had evolved into a formal offering called Euro-clear, complete with hyphen.
It was the world's first international central securities depository.
Why Competitors Feared Morgan's Creation
Euro-clear's creation was not universally welcomed. Financial firms in Luxembourg grew nervous.
The concern was simple but serious: Morgan Guaranty was not just operating the settlement system. It was also a major trading firm in its own right. Rivals worried that Morgan could peek at settlement data to gain an unfair advantage in its trading operations. If Morgan could see who was buying and selling what, it might front-run trades or spot market trends before anyone else.
This fear prompted a response. In September 1970, a consortium of Luxembourg-based institutions launched Cedel, a competing international settlement system. Cedel later merged with another organization to become Clearstream, which remains Euroclear's main rival to this day. Both are headquartered within a few hundred kilometers of each other—Euroclear in Brussels, Clearstream in Luxembourg.
The geographical proximity is not coincidental. Both cities sit at the heart of Europe, with strong traditions of financial neutrality and sophisticated banking law. Both emerged as natural homes for the plumbing of international finance.
A Name That Confuses
Here is something that trips up even financial professionals: Euroclear does not actually perform clearing.
This sounds contradictory. After all, the word "clear" is right there in the name. But in modern financial terminology, clearing and settlement are distinct activities.
Clearing happens first. When two parties agree to a trade, a clearinghouse steps in as an intermediary. It becomes the buyer to every seller and the seller to every buyer. This protects both parties: if one side defaults, the clearinghouse absorbs the loss. Clearinghouses manage counterparty risk.
Settlement happens afterward. Once a trade is cleared, the actual securities and money change hands. This is where the CSD comes in. It records the new ownership.
When Euroclear was named in 1968, this distinction barely existed. Clearing and settlement were often viewed as a single activity. Central counterparty clearing—where a clearinghouse stands between the buyer and seller—became widespread only later. By then, the name had stuck.
So Euroclear settles trades. It does not clear them. Despite its name.
From Operator to Owner
For its first three decades, Euroclear had an unusual structure. Morgan Guaranty owned and operated the system on behalf of its clients. But in 1972, a new entity was created: Euro-clear Clearance System Limited, incorporated in England but domiciled in Switzerland. Over one hundred twenty major financial institutions became shareholders. They purchased the Euroclear System from Morgan, though Morgan continued to operate it under contract.
This arrangement lasted until the end of 2000, when the operation was transferred to a newly created subsidiary called Euroclear Bank. The parent entity was renamed Euroclear plc.
Morgan was finally out of the picture. Euroclear had become a utility owned by its users.
The Acquisition Spree
With its new corporate structure in place, Euroclear went on a shopping spree.
The targets were national CSDs—the domestic equivalents of what Euroclear did internationally. France's Sicovam joined in 2001. The Netherlands' Necigef and the United Kingdom's CRESTCo followed in 2002. Belgium's CIK came aboard in 2006. Finland's APK and Sweden's VPC, which had already merged with each other, were acquired in 2008.
Each acquisition brought Euroclear closer to a vision of seamless cross-border settlement. If you owned French stocks and wanted to use them as collateral for a loan in the Netherlands, having both countries' securities in the same infrastructure made things dramatically simpler.
The acquired CSDs were rebranded: Euroclear France, Euroclear Nederland, Euroclear UK and Ireland, and so on. A new Belgian holding company, Euroclear SA/NV, was created in 2005 to sit atop this growing empire.
Building a Single Platform
Owning multiple national CSDs was one thing. Making them work together seamlessly was another.
In 2004, Euroclear announced an ambitious project called ESES, which stood for Euroclear Settlement of Euronext-zone Securities. The goal was to create a single technical platform for Belgium, France, and the Netherlands—the three countries whose stock exchanges had merged to form Euronext.
Implementation took years, stretching from 2007 to 2009. But when complete, it meant that a Belgian investor buying French shares experienced the same settlement process as if they were buying Belgian shares. National borders, at least for settlement purposes, had been erased.
In 2016, these three CSDs connected to an even larger initiative: TARGET2-Securities, or T2S, a settlement platform operated by the European Central Bank. T2S aimed to create a single settlement engine for all of Europe. Euroclear was among the first major participants.
Collateral: The Hidden Currency of Finance
To outsiders, the notion of a "settlement utility" sounds almost bureaucratic. Who cares about the paperwork behind trades?
But this undersells the importance. In modern finance, the securities sitting in a CSD are not just investments. They are collateral—the security you pledge when borrowing money.
When banks lend to each other overnight, they typically demand collateral. When companies enter into derivatives contracts, they post collateral to protect against default. When central banks provide emergency loans, they require collateral too. The entire machinery of modern finance depends on the ability to quickly pledge and move high-quality securities.
This makes CSDs surprisingly powerful. They control access to collateral.
In 2013, Euroclear and its American counterpart, the Depository Trust and Clearing Corporation (DTCC), created a link allowing collateral to move automatically between their systems. If a European bank needed to post collateral with an American counterparty, the securities could flow seamlessly. The goal was eventually to create what they called a single pool of collateral—assets that could move globally without friction.
Similar links followed. Panama's securities market connected to Euroclear in 2014. Mexico opened its corporate bonds to the platform in 2015. Each connection extended the reach of this collateral superhighway.
Brexit and the Flight to Belgium
For years, Euroclear's ultimate parent company was based in London. This made sense: London was Europe's largest financial center, and many of Euroclear's clients operated there.
Then came Brexit.
When the United Kingdom voted to leave the European Union in 2016, Euroclear faced a problem. EU financial regulations grant significant advantages to institutions based within the bloc. An EU-based CSD can operate across all member states with relative ease. A non-EU CSD faces higher barriers.
By 2018, Euroclear had made its decision. A new holding company, Euroclear Holding SA/NV, was established in Brussels. Ownership of the entire group was transferred from London. Euroclear would remain inside the European Union.
There was a further twist in 2021. Irish securities, which had previously been held through Euroclear UK and Ireland, were transferred to Euroclear Bank—the Brussels-based international CSD. Ireland, after all, remained in the EU. The British CSD was renamed Euroclear UK and International, reflecting its diminished scope.
The Frozen Billions
All of this brings us back to those frozen Russian assets.
Central banks around the world hold reserves—stockpiles of foreign currency and securities that they can deploy in emergencies. Russia's central bank was no exception. Before the invasion of Ukraine, it held over six hundred billion dollars in reserves, diversified across multiple currencies and jurisdictions.
A significant portion of those reserves—roughly two hundred billion euros—was held in the form of European securities deposited at Euroclear. Government bonds. Corporate bonds. The kinds of safe, liquid assets that central banks prefer.
When Western nations imposed sanctions on Russia in February 2022, those assets were immobilized. Euroclear did not confiscate them, exactly. It simply stopped processing any transactions involving them. The securities remained in the vault, but Russia could not sell them, move them, or collect the interest payments.
The interest kept accruing, though. Those bonds continued paying coupons. By 2024, the pile of frozen cash had grown to include roughly four billion euros in interest income alone.
In 2024, the Group of Seven wealthy democracies—the G7—agreed to use that interest income to back a fifty-billion-dollar loan to Ukraine. Belgium, as Euroclear's regulator, authorized the payouts beginning in 2025. The capital remains frozen, but the income now flows to Kyiv.
This represents an extraordinary development. A private financial utility, owned by a consortium of banks and other institutions, has become a tool of geopolitical warfare. The humble settlement system—designed decades ago to handle eurobond paperwork—now sits at the center of one of history's largest asset freezes.
Who Actually Owns Euroclear?
Given its newfound importance, the question of who controls Euroclear matters more than ever.
The answer is surprisingly diverse. As of early 2025, no single shareholder dominates. The largest stake—about sixteen percent—belongs to Sicovam Holding, a French entity representing the former shareholders of France's national CSD before its merger with Euroclear. France's Caisse des Dépôts et Consignations, a state-owned investment institution, holds another eleven percent.
Belgium's federal holding company, SFPI-FPIM, controls nearly ten percent directly, plus another three percent through a consortium of Belgian financial institutions. This gives the Belgian government significant influence, which matters since Belgium is also Euroclear's primary regulator.
Other major shareholders include sovereign wealth funds from New Zealand, China, Singapore, and the Australian state of New South Wales. The Chinese stake—about seven percent held through China's State Administration of Foreign Exchange—has attracted some scrutiny, though China has no seat on the board.
The ownership structure reflects Euroclear's status as critical infrastructure. No single country or institution controls it. Yet everyone with a stake in the global financial system has reason to care about how it operates.
The Future of Financial Plumbing
Euroclear continues to evolve. In recent years, it has expanded into investment funds, acquiring platforms that handle the buying and selling of mutual funds and exchange-traded funds. A 2024 restructuring simplified its corporate structure, merging several intermediate holding companies.
In early 2025, Euroclear Bank received approval to open a branch in Singapore, expanding its footprint in Asia. The goal is to become ever more central to global finance—the default place where securities rest between trades.
This ambition carries risks. The more essential Euroclear becomes, the more attractive it is as a target for sanctions, cyberattacks, or geopolitical pressure. The Russian asset freeze demonstrated that neutrality has limits. In a world of competing great powers, can any financial utility remain truly neutral?
The frozen Russian billions will remain a test case for years to come. The underlying securities—the actual bonds—are maturing in 2026 and 2027. When they mature, the Russian government should theoretically receive the principal. But whether that will happen, under what conditions, and with whose permission, remains an open question.
Meanwhile, the interest keeps accruing. The vault keeps growing. And the institution that few had heard of before 2022 remains at the center of a standoff between East and West—all because, decades ago, someone needed a better way to settle eurobond trades in Brussels.