Central Securities Depositories and Geopolitical Risks Challenges for European Policy

Central Securities Depositories (CSDs) form the backbone of financial market infrastructure by registering securities, settling trades, distributing cash flows, and managing collateral. While often regarded as mere financial "plumbing," they in fact underpin strategic objectives such as advancing the Savings and Investment Union, curbing tax evasion, and reinforcing Europe's geopolitical stance. The academic and policy debate on CSDs is fragmented across three strands of literature that rarely intersect. From a regulatory perspective, concerns focus on the persistent fragmentation of the EU CSD market. From a political economy perspective, omnibus accounts and opaque custody chains are criticized for facilitating tax evasion. From a geopolitical perspective, Euroclear – the EU's largest International CSD – has been thrust into the spotlight for its central role in immobilizing and freezing Russian assets after the 2022 invasion of Ukraine. This Paper brings these three strands of literature together to identify and analyze the key challenges facing European policymakers.