Lightnews — Scholar-powered news

Marco Garofalo @marcogarofalo.bsky.social · Jun 21

Link to paper w/ my amazing co-authors
Giovanni Rosso and Roger Vicquery
ora.ox.ac.uk/objects/uuid...

ora.ox.ac.uk

Marco Garofalo @marcogarofalo.bsky.social · Jun 21

Phenomenal #NBUNBPconference25 at National Bank of Ukraine. Presented our work on financial sanctions and USD dominance, focusing on how post-2014 international lending to Russia de-dollarized ($⬇) in favour of a euroization (€⬆️)
events.bank.gov.ua/ARConference...

Research Conference 2025

Research Conference NBU

events.bank.gov.ua

1 4

Reposted by Marco Garofalo

Katja Bego @katjabego.bsky.social · Jun 9

On increasing the NATO spending norm to 5%: “Spending more is not about pleasing an audience of one, it is about protection a billion people.”

Mark Rutte at @chathamhouse.org

8 25

Reposted by Marco Garofalo

Chatham House @chathamhouse.org · Jun 6

Ukraine’s Operation Spider’s Web will enter the history books as one of the most remarkable and best-executed covert operations of the war, writes @katjabego.bsky.social.

Ukraine’s Operation Spider’s Web is a game-changer for modern drone warfare. NATO should pay attention

The use of cheap drones to strike targets deep within Russia provides a blueprint for rapidly evolving modern warfare that should inform how states seek to defend themselves.

www.chathamhouse.org

1 11 32

Reposted by Marco Garofalo

Daniel McDowell @danielmcdowell.bsky.social · Apr 15

Fascinating new work linking financial sanctions to the dollar's use in Russia.

Marco Garofalo @marcogarofalo.bsky.social · Apr 15

📣📣📣 New paper out 📣📣📣
With Giovanni Rosso and Roger Vicquery, we study the interplay between financial sanctions and dollar dominance focusing on how post-2014 international lending to Russia de-dollarized ($⬇) in favour of a euroization (€⬆️) ora.ox.ac.uk/objects/uuid...
🧵👇[1/10]

#EconSky

2 9

Reposted by Marco Garofalo

Marco Garofalo @marcogarofalo.bsky.social · Apr 15

📣📣📣 New paper out 📣📣📣
With Giovanni Rosso and Roger Vicquery, we study the interplay between financial sanctions and dollar dominance focusing on how post-2014 international lending to Russia de-dollarized ($⬇) in favour of a euroization (€⬆️) ora.ox.ac.uk/objects/uuid...
🧵👇[1/10]

#EconSky

2 3 9

Marco Garofalo @marcogarofalo.bsky.social · Apr 15

ICYMI: @davidbeckworth.bsky.social @helene-rey.bsky.social @danielmcdowell.bsky.social @apferrero.bsky.social @antoineberthou.bsky.social @edwardfishman.bsky.social @himself.bsky.social @mmaggiori.bsky.social @weisenthal.bsky.social @guntramwolff.bsky.social @rebeccawire.bsky.social

2 4

Marco Garofalo @marcogarofalo.bsky.social · Apr 15

Specifically, our main innovation is to model sanctions as a currency-specific wedge on assets with different denominations. As US sanctions tighten the constraint on USD assets, financial intermediaries reallocate their portfolios towards other currencies.

[10/10]

1 4

Marco Garofalo @marcogarofalo.bsky.social · Apr 15

We plug this insight into a novel 3-country 3-currency framework, where financial sanctions are financial frictions.

[9/10]

1 3

Marco Garofalo @marcogarofalo.bsky.social · Apr 15

In other words: financial sanctions created a new currency-circuit-specific friction.

The risk of counterparts being cut off from the dollar payment system led to a rebalancing of portfolios towards the euro.

[8/10]

1 3

Marco Garofalo @marcogarofalo.bsky.social · Apr 15

Why the euro? We argue that the threat of US extra-territorial sanctions targeting users of the USD international payment system increased “settlement risk” for USD transactions, relative to EUR.

[7/10]

1 3

Marco Garofalo @marcogarofalo.bsky.social · Apr 15

Even more striking: the shift to euro lending happened regardless of the bank’s national jurisdiction, i.e. whether the ultimate parent was American, European/G7, or from a non-sanctioning country.

[6/10]

1 3

Marco Garofalo @marcogarofalo.bsky.social · Apr 15

So, banks didn’t necessarily leave, but they changed currency …

[5/10]

1 4

Marco Garofalo @marcogarofalo.bsky.social · Apr 15

We zoom in on the UK using confidential bank-level data, and show that most of the new euro lending came from the same banks that had decreased their USD lending: both banks that started lending in EUR (🟨👇), and those already lending in EUR which started to lend more
(🟦👇).

[4/10]

1 3

Marco Garofalo @marcogarofalo.bsky.social · Apr 15

But this aggregate picture disguises a striking underlying fact: the share of cross-border lending to Russia in US dollars fell from 65% to 25%. Meanwhile, euro-denominated lending rose from 20% to 45%. (Source: BIS LBS)

How did that happen?

[3/10]

1 3

Marco Garofalo @marcogarofalo.bsky.social · Apr 15

Following the 2014 invasion of Crimea and the imposition of financial sanctions on Russia, global cross-border lending to Russia declined significantly. (Source: BIS LBS)

[2/10]

1 3

Marco Garofalo @marcogarofalo.bsky.social · Apr 15

📣📣📣 New paper out 📣📣📣
With Giovanni Rosso and Roger Vicquery, we study the interplay between financial sanctions and dollar dominance focusing on how post-2014 international lending to Russia de-dollarized ($⬇) in favour of a euroization (€⬆️) ora.ox.ac.uk/objects/uuid...
🧵👇[1/10]

#EconSky

2 3 9

Marco Garofalo @marcogarofalo.bsky.social · Apr 7

1

Marco Garofalo @marcogarofalo.bsky.social · Apr 7

bankofengland.co.uk/-/media/boe/...

new version coming soon!

bankofengland.co.uk

1 3

Marco Garofalo @marcogarofalo.bsky.social · Apr 7

Fantastic 10th Annual West Coast Workshop in International Finance at Santa Clara last Friday. Huge thanks to Vito Cormun, Helen Popper, @sanjaysingh.bsky.social and all organisers!
Top research by colleagues and great to share the latest version of our paper on UK export dollarization post-Brexit.

3 1 5

Reposted by Marco Garofalo

Thomas Sampson @thomsampson.bsky.social · Apr 7

Interested in how trade barriers affect firms?

New @voxeu.org column on our research on firm-level effects of Brexit on UK goods trade

Leaving single market and customs union reduced UK exports and imports

Smaller firms hardest hit: around 16,400 firms stopped exporting to EU because of TCA

VoxEU @ CEPR @voxeu.org · Apr 7

Dismantling deep integration has consequences for #trade. Brexit reduced worldwide UK #exports by 6.4% and worldwide #imports by at least 3.1%. Smaller firms suffered larger declines than large firms.
@marcogarofalo.bsky.social @thomsampson.bsky.social et al
cepr.org/voxeu/column...
#EconSky

Graphs of the estimated changes in firm trade with EU versus rest of the world following Brexit by firm size quintile. Smaller firms experienced a larger impact than large firms.

How does dismantling deep integration affect international trade? This column uses firm-level customs data to study the impact of Brexit on UK goods trade. The authors find that in the short term, exit from the Single Market and Customs Union reduced worldwide UK exports by 6.4% and worldwide imports by at least 3.1%. Importers partly compensated for lower EU imports by sourcing more from outside the EU, while exports to non-EU countries were unaffected. Moreover, smaller firms suffered larger declines in trade with the EU, whereas the largest firms did not experience a fall in exports.
Lookup fields should be configured in the field menu dropdown

14 24

Reposted by Marco Garofalo

VoxEU @ CEPR @voxeu.org · Apr 7

Dismantling deep integration has consequences for #trade. Brexit reduced worldwide UK #exports by 6.4% and worldwide #imports by at least 3.1%. Smaller firms suffered larger declines than large firms.
@marcogarofalo.bsky.social @thomsampson.bsky.social et al
cepr.org/voxeu/column...
#EconSky

11 26

Reposted by Marco Garofalo

Sanjay R. Singh @sanjaysingh.bsky.social · Apr 2

We are looking forward to the 10th Annual West Coast Workshop in International Finance at Santa Clara University this Friday.

Program can be found here:

sanjayrajsingh.github.io/CFP/Agenda_W...

1 3

Reposted by Marco Garofalo

Marco Garofalo @marcogarofalo.bsky.social · Mar 12

Really great to see our research on the impact of Brexit on UK trade featured in today’s @adamtooze.bsky.social Chartbook.

2 9 14

Marco Garofalo @marcogarofalo.bsky.social · Mar 12

For the full open access paper with my co-authors @thomsampson.bsky.social, Rebecca Freeman, Enrico Longoni, Kalina Manova, Rebecca Mari and Thomas Prayer, see here: ora.ox.ac.uk/objects/uuid...

Deep integration and trade: UK firms in the wake of Brexit - ORA - Oxford University Research Archive

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,

ora.ox.ac.uk

1