Welcome to our work on Macro Finance

Financial sanctions can reshape how banks lend across borders. 

In research with Giovanni Rosso and Roger Vicquéry, Marco Garofalo studies Russia after the imposition of sanctions following its invasion of Crimea in 2014. 

The dollar’s share of cross-border bank lending to Russia fell sharply between 2014 and 2021, while the euro’s share rose. Notably, this shift towards euros was driven by firms not targeted by those sanctions and also involved banks from the sanctioning coalition of countries. 

Our evidence points to borrowers and banks adapting to sanctions-driven compliance risks with dollar payments. This can weaken the geoeconomic power the United States derives from dollar dominance.

Want to know more about their research? Download their paper below.

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