Financial sanctions and the share of US dollar in global reserve currencies: evidence from the Least Absolute Shrinkage and Selection Operator (LASSO) model

Aliyu R. Sanusi, Suleiman O. Mamman, Jamilu Iliyasu, Attahir Abubakar

Research output: Contribution to journalArticlepeer-review

Abstract

The decline in the dollar’s share in global reserve currencies has generated debate on the effect of the United States’ financial sanctions. This study examines the effect of US financial sanctions on the dollar’s share in global reserve currencies by employing the Least Absolute Shrinkage and Selector Operator (LASSO) model. The estimates suggest that the imposition of financial sanctions by the US reduces the dollar’s share in global reserve currencies. This implies that although the US dollar remains the foremost global reserve currency, the imposition of financial sanctions may weaken its dominance.
Original languageEnglish
Pages (from-to)1-4
Number of pages4
JournalApplied Economics Letters
DOIs
Publication statusE-pub ahead of print - 22 Nov 2023

Keywords

  • US dollar
  • financial sanctions
  • central banks
  • global reserve currency

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