'Russia has to pay': G7 taps Moscow's frozen assets in support of Ukraine

• "Russia has to pay," European Council President Charles Michel told CNBC's Steve Sedgwick.
• It comes after the leaders of the Group of Seven (G7) major democracies agreed in principle to issue $50 billion in loans for Ukraine that are backed by the profits of frozen Russian sovereign assets.
• Moscow has previously denounced such a move, warning of dramatic consequences if Western leaders go ahead with the proposal.

A simple principle underpins a contentious Thursday decision by the U.S. and key allies to tap profits from Russian sovereign assets in support of Ukraine: Moscow must make reparations.

"Russia has to pay," European Council President Charles Michel told CNBC's Steve Sedgwick, after the leaders of the Group of Seven (G7) major democracies agreed in principle to issue $50 billion in loans for Ukraine that are backed by the profits generated by roughly 300 billion euros ($322 billion) of Russian central bank assets frozen by the West.

The G7 comprises the U.S., Canada, U.K., France, Germany, Italy and Japan.

U.S. President Joe Biden publicly broadcast the "significant outcome" of the G7's consensus during a Thursday press briefing beside his Ukrainian counterpart Volodymyr Zelenskyy, after the two leaders signed a 10-year bilateral security agreement.

"I'm very pleased to share that this week the G7 signed a plan to finalize and unlock $50 billion from the proceeds of those frozen [Russian] assets, to put that money to work for Ukraine, [in] another reminder to Putin that we're not backing down," Biden said.

Moscow has previously denounced such a move, warning of dramatic consequences if Western leaders go ahead with the proposal. Questions have also been raised over the legality of setting such a precedent: Russia