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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...
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. Herein, we develop a new theory that attributes supplier diversification to buyer risk. When suppliers are subject to the … strategy in equilibrium. Our theory can help explain sourcing strategies when risk in a trade relationship originates from the …
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