"It is necessary and urgent for our coalition to find a way to unlock the value of these immobilized assets to support Ukraine's continued resistance and long-term reconstruction," Yellen said in remarks in Brazil, where Group of 20 finance ministers and central bank governors are meeting this week.
"I believe there is a strong international law, economic, and moral case for moving forward. This would be a decisive response to Russia's unprecedented threat to global stability," she said.
The United States and its allies froze hundreds of billions of dollars in Russian foreign holdings in retaliation for Moscow's invasion of Ukraine. Those billions have been sitting untapped as the war grinds on, now in its third year, while officials from multiple countries have debated the legality of sending the money to Ukraine. More than two-thirds of Russia's immobilized central bank funds are located in the EU.
The idea of using Russia's frozen assets has gained traction lately as continued allied funding for Ukraine becomes more uncertain and the U.S. Congress is in a stalemate over providing more support. But there are tradeoffs since the weaponization of global finance could harm the U.S. dollar's standing as the world's dominant currency.
Last Thursday the U.S. Senate Committee on Foreign Relations approved the REPO act, the law that would allow frozen Russian assets to be allocated to Ukraine, to which the Kremlin has promised to respond to if the West ultimately takes that step. The European Union and the United States have not yet made a decision, but Moscow has warned that billions of Western assets that are still trapped in Russian accounts will remain permanently in the hands of the Kremlin.
Ukrainian Foreign Minister Dmytro Kuleba recently wrote an article in Politico calling for the confiscation of Russian funds.
"Russia must pay for the enormous damage it's done to Ukraine with its unprovoked and entirely unjustified aggression," he wrote. "And as we mark the second anniversary of Russia's full-scale invasion, there's money available to help compensate for some of the physical destruction it's caused and aid Ukraine's defense."
Kuleba said that "As it stands, there are over $300 billion in Russian central bank assets frozen in various Western jurisdictions. There's also other "immobilized" Russian money out there from sanctioned Russian oligarchs. And Ukrainian President Volodymyr Zelenskyy rightly persists in insisting on the confiscation of these assets to aid Ukraine's recovery and defense."
U.S. National Security Spokesman John Kirby said at a White House press briefing Tuesday that "we still believe Russia needs to be responsible for the damage" brought onto Ukraine by "exploring the option of using those frozen assets."
He said, "we still need more legislative authorities from Congress" to spend the immobilized funds, and "we have got to have our coalition partners to come along with us."
Bipartisan legislation circulating in Washington called the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act would use assets confiscated from the Russian Central Bank and other sovereign assets for Ukraine. Leading lawmakers had tried to push it as a way to help provide Ukraine aid, but it has since not moved forward.
Earlier this month, the European Union passed a law to set aside windfall profits generated from frozen Russian central bank assets. Yellen calls that "an action I fully endorse."
As Kuleba noted, "Russia isn't just waging war on Ukraine, it's attempting to undermine the West's rules-based order -- including rule of law. And raising thin legal objections in a bid to stop the confiscation of the assets of an enemy that wants to smash this order runs counter to the instinct of survival."
He added that "Confiscation would not only be fair, it would be legitimate -- this has already been established by numerous legal scholars and jurists. According to international law, an aggressor state has an obligation to make reparations for acts of armed aggression. The U.N. Articles on the Responsibility of States for Internationally Wrongful Acts allow for such countermeasures."
Kuleba added that confiscation would not risk destabilizing the Western financial system and international finance, nor would it undermine reserve currencies.
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