International Sanctions and Dollar Dominance

Javier Bianchi and César Sosa-Padilla

The Economic Journal, 2025, vol. 135, issue 672, 2567-2577

Abstract: We propose a simple monetary model to investigate the implications of international financial sanctions for the pre-eminence of the US dollar in the international financial system. We show how the anticipation of financial sanctions can reduce the US dollar convenience yield and the holdings of US dollar assets. We also evaluate the implications for welfare and show that they are generally detrimental for all countries.

Date: 2025
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Working Paper: International Sanctions and Dollar Dominance (2023)
Working Paper: International Sanctions and Dollar Dominance (2023)
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