Is gold supplanting the dollar? Did the use of sanction by the US reduce holdings of dollars by targeted central banks? Did the 2018-19 tariffs reduce holdings of dollars by countries hit with Section 232 tariffs? Jeff Frankel, Hiro Ito and I address these questions in a new paper.

We analyze the determinants of individual central bank holdings of international reserves, as shares of gold, dollar, euro, pound, yen and yuan, over the 1999-2022 period.  We augment standard economic determinants of size, exchange rate volatility, currency pegs and bilateral trade with bilateral political/economic variables such as disagreement in UN voting, military alliances, and financial and trade sanctions. These variables augment uncertainty measures such as global Economic Policy Uncertainty, US monetary and trade policy uncertainty, and the VIX. In addition, we investigate whether the US imposition of tariffs in 2018 had any measurable impact on dollar and other holdings. We conclude