This is a guest post by Robert McCauley, non-resident senior fellow at the Global Development Policy Center at Boston University and an associate member of the Faculty of History at the University of Oxford.
What impact will the freeze of Russian central bank reserves have on the dollar’s dominance? Russia’s own attempts to fortify its balance sheet after the 2013 Crimean annexation offers some clues.
In response to the initial wave of western sanctions after the first Ukrainian crisis, the Central Bank of Russia moved its dollars out of the US — but, to a remarkable extent, held on to them.
Instead of offloading dollar exposure, Russia fortified its finances in four ways:
1) It increased reserve levels.
In response to the western backlash against its annexation of Crimea, the CBR increased its overall foreign reserves by 24 per cent from the end of 2013 to $630bn by the end of 2021
2) It stockpiled gold.
Most of the extra…
