Research

Sanctions and Currencies in Global Credit, with Giovanni Rosso and Roger Vicquery.  

[Paper] [Oxford Discussion Paper]

[Bluesky thread][Twitter thread]

Abstract: This paper studies the effect of financial sanctions on the dominance of the US dollar in global credit markets. In the aftermath of the invasion of Crimea in 2014, sanctions imposed by both the US and the EU restricted the provision of financial services to Russian firms. We document how, between 2014 and 2021, the share of global cross-border credit to Russia denominated in US dollars declined from 65% to 25%, while the share denominated in euros rose from 20% to 45%. Relying on confidential bank-level data covering the universe of global banks located in the UK, we show that this shift was driven by banks previously lending to Russia in US dollars, and that banks shifted to euro lending to Russia regardless of whether their ultimate owner was based in a sanctioning jurisdiction or not. We argue that this euroisation relates to an increase in the relative “settlement risk” of US dollar claims, in the context of US extra-territorial sanctions targeting the dollar payment system. We rationalise our findings in a three-country model with financial intermediaries, where sanctions are introduced as both jurisdiction and currency-circuit specific frictions.

Presentations: Bank of England, University of Oxford, Transatlantic Doctoral Conference - London Business School [London, June 2025], 9th Annual Research Conference "Economic and Financial Integration in a Stormy and Fragmenting World" [Kyiv, June 2025], Kiel-CEPR Research Seminar [Berlin, Oct 2025],  Stabilization Policy Amid Shifting Global Relations - BdF & EUI [Paris, November 2025].

Dominant Currency Pricing Transition, with Giovanni Rosso and Roger Vicquery.  

[Paper] [Bank of England Working Paper] [Oxford Discussion Paper] [Centre for Macroeconomics Discussion Paper] [Slides] 

[VoxEU] [Bank Underground] [Twitter thread] [Coverage: FT, Alternatives Economiques]

[Data - Figure 1]

Abstract: We explore an episode of aggregate transition to dominant currency pricing in a large developed economy, relying on transaction-level data on the universe of UK trade between 2010 and 2022. Until 2016, the majority of UK non-EU exports were invoiced in British pounds, the ”producer” currency. However, in the aftermath of the June 2016 Brexit referendum and the subsequent depreciation of the pound, the share of non-EU UK exports invoiced in pounds started to sharply decrease – by more than 20 percentage points. This was mirrored by an increase of similar magnitude in the share of US dollar invoicing, which by 2019 overtook the pound as the main non-EU export invoicing currency. Using shift-share and event-study identification strategies, we show that large foreign-exchange movements can generate a transition in invoicing choices for firms with low levels of operational hedging, that is whose exports are not denominated in the same currency as their import. We find that that this currency-mismatch valuation channel accounts for most of the transition away from producer currency pricing, above and beyond effects from strategic complementarities and market power. Finally, we show that this shift in export pricing paradigm has important aggregate consequences for export pass-through and the allocative effects of price rigidities. Exports exhibit significantly higher elasticity to USD exchange-rate movements after the Brexit referendum: a USD dollar appreciation depresses demand for exports by twice as much than before this ‘dominant currency pricing transition’. 

Presentations: Bank of England, University of Oxford, Joint BIS, BoE, ECB and IMF Spillover Conference [Basel, April 2024], LSE-Oxford Workshop in International Macroeconomics and Finance [London, May 2024], Eighth Annual Workshop ESCB Research Cluster 2 International Macroeconomics, Fiscal Policy, Labour Economics, Competitiveness and EMU Governance [Rome, October 2024], 10th BdF-BoE-BdI international macroeconomics workshop: "Structural factors in the global economy" [Paris, October 2024], 10th Annual West Coast Workshop in International Finance [Santa Clara, April 2025], "10 years of Brexit: economic impacts and lessons learned" workshop [London, May 2025]

Deep Integration and Trade: UK Firms in the Wake of Brexit, with Rebecca Freeman, Enrico Longoni, Rebecca Mari, Kalina Manova, Thomas Prayer, Thomas Sampson.   Submitted!

[CEP Discussion Paper] [Oxford Discussion Paper] [CEPR Discussion Paper]

[VoxEU] [Blog - UKICE] [Coverage: The Economist, FT, Times, City AM, Politico, Guardian, BBC, nu.nl]

Abstract: How does dismantling deep integration affect international trade? This paper provides new evidence on the consequences of disintegration by estimating the impact of Brexit on goods trade by UK firms. The UK's exit from the EU's single market and customs union in January 2021 led to an immediate, sharp drop in both exports and imports with the EU for the average firm. In addition, many exporters and importers stopped trading with the EU entirely. However, heterogeneous firm-level responses to the implementation of trade barriers mitigated Brexit's impact on aggregate trade. The decline in exports was concentrated among smaller firms, but insignificant for the largest firms. Our estimates imply that, in the short run, leaving the EU reduced worldwide UK exports by 6.4% and worldwide imports by 3.1%. The fall in imports was driven by lower imports from the EU, which importers offset by sourcing more from the rest of the world.

Presentations: NIESR [London, November 2023], ASSA session "De-Globalisation and Reconfiguration of Trade Flows" [San Antonio, January 2024], LSE-CEP Trade Policy Workshop [London, May 2024],"New economic perspectives on trade costs" workshop, [Paris, May 2025], "International Trade and Industrial Policy in a Changing World" [Paris, May 2025], "10 years of Brexit: economic impacts and lessons learned" workshop [London, May 2025], European Trade Study Group (ETSG) [Milan, Sept 2025].