Investigators from University of Cincinnati Release New Data on Economics (Hedging Sanctions Risk: Cryptocurrency In Central Bank Reserves): Economics

2025 DEC 01 (NewsRx) -- By a News Reporter-Staff News Editor at NewsRx Policy and Law Daily -- Investigators publish new report on Economics. According to news reporting out of Cincinnati, Ohio, by NewsRx editors, the research stated, “Central banks may shift their international reserve holdings in order to protect themselves ex-ante against the risk of financial sanctions by fiat reserve currency issuers. For example, from 2016 to 2021, countries facing a higher risk of US sanctions increased the gold share of their reserves more than countries facing a lower risk of US sanctions.”

Our news journalists obtained a quote from the research from the University of Cincinnati, “This paper explores the potential for Bitcoin to serve as an alternative hedging asset. I describe a dynamic Bayesian copula model to simulate the joint returns of Bitcoin and other reserve assets under a wide range of plausible sanctions probabilities, quantifying the extent to which varying levels of sanctions risk increase optimal gold, renminbi, and Bitcoin allocations.”

According to the news editors, the research concluded: “I conclude that sanctions risk may diminish the appeal of US Treasuries, propel broader diversification in central bank reserves, and bolster the long-run fundamental value of both cryptocurrency and gold.”

This research has been peer-reviewed.

For more information on this research see: Hedging Sanctions Risk: Cryptocurrency In Central Bank Reserves. Journal of International Money and Finance, 2025;159. Journal of International Money and Finance can be contacted at: Elsevier Sci Ltd, 125 London Wall, London, England. (Elsevier - www.elsevier.com; Journal of International Money and Finance - http://www.journals.elsevier.com/journal-of-international-money-and-finance/)

Our news journalists report that additional information may be obtained by contacting Matthew Ferranti, University of Cincinnati, Cryptoecon Lab, Cincinnati, OH 45219, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.jimonfin.2025.103433. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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