Unilateral Sanctions targeting Central Bank Assets

The use of unilateral sanctions as a foreign policy tool has become increasingly prevalent in recent years, particularly among States of the Global North. However, their impact or usefulness and their legitimacy are highly debated and contested. The Human Rights Council has noted that these sanctions can have far-reaching implications, disproportionately affecting the poor and vulnerable populations. The UN General Assembly expressed concerns about the disproportionate impact on social and economic development.

Sanctions targeting central bank assets are part of this broader debate, but also raise distinct (legal) issues. Central banks play a crucial role in a nation's monetary stability and fiscal integrity, holding assets in multiple jurisdictions, including foreign-exchange reserves. Freezing or immobilization of these assets can severely hinder a State's ability to influence monetary policy, akin to a "financial nuclear weapon."

Most recently, the European Commission, France, Germany, Italy, Japan, Switzerland, the United Kingdom, Canada, and the United States immobilized assets of the Russian central bank in response to Russia's aggression against Ukraine. This move, described by Russia as "outright thievery," led to the freezing of assets worth over €200 billion in the EU and €300 billion in G7 States. Subsequently, in light of the vast damages to Ukraine and its people, ideas have circulated how the frozen assets could be used to rebuild the war-torn State.  Proposal range from seizing or confiscating the assets to using the proceeds of the assets. While States have historically seized assets from States with which they are at war, third-party states typically have not done so.

This project aims to further the understanding of the legal framework governing unilateral sanctions targeting central bank assets and to comprehensively analyze the legal obligations restricting such measures. A doctrinal method will thereby serve as the principal approach. Such sanctions can potentially impact various obligations under international law. However, the legal framework, its applicability, and the scope of these obligations are uncertain. While some issues reflect broader and fundamental debates in international law, others have been overlooked and remain underexplored. An in-depth examination through the lens of central bank sanctions offers valuable insights into their interconnected nature and illuminates the legal framework of these foreign policy tools.