Seizing central bank assets?

We study the global macroeconomic and financial impacts of sanctions on central bank assets. We build a new database on freezes and seizures of central bank assets spanning 1914–2024, which we compare with discussions on today’s Russia. We show that the scale of the freeze on the Central Bank of Russia’s assets is rarely seen in history and that non-belligerent countries have never seized central bank assets to finance reconstruction in a third country in an ongoing war—unlike what is being discussed by scholars for today’s Russia. We propose a three-country DSGE model to provide a conceptual framework to understand the global impact of sanctions on central bank assets and tease out the macroeconomic mechanisms. A key insight of the model is that seizing central bank assets can backfire on the sanctioning country in general equilibrium. Calibrated model simulations suggest that seizing today’s Russia’s immobilized sovereign assets could lead to an increase in interest rates on U.S. government bonds of 90 basis points.