2025/12/26 by Massimo Ferrari Minesso, Tobias Krahnke, Arnaud Mehl +1 · 1 voice
Economics, Econometrics and Finance · #Bank rate #Banking stability, regulation, efficiency #Central bank #Dynamic stochastic general equilibrium #European Monetary and Fiscal Policies #Exchange rate #Global Financial Crisis and Policies #Interest rate #Official cash rate #Payment #Sanctions
paper · doi:10.1016/j.jinteco.2025.104207
published in Journal of International Economics 163, 104207 (Elsevier BV)
openalex created_date 2025/12/26 · openalex publication_date 2025/12/26 · openalex updated_date 2026/07/26
We study the global impacts of sanctions on central bank assets. We build a database on freezes and seizures of central bank assets spanning 1914–2024. We show that the scale of the freeze on today’s Central Bank of Russia’s assets is rarely seen in history and that non-belligerent countries have never seized central bank assets to finance reconstruction in a third country in an ongoing war. We propose a three-country DSGE model to understand the global impacts of sanctions on central bank assets and tease out the macroeconomic mechanisms. One insight of the model is that seizing central bank assets can result in adverse effects on the sanctioning country in general equilibrium. Calibrated model simulations suggest that seizing Russia’s immobilized sovereign assets could result in higher interest rates on sanctioning countries’ government bonds. The increase in interest rate payments could surpass the assets’ amount seized after about three years.