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the currency market under sanctions Itskhoki, O. & Mukhin, D. (2026). Financial repression and the currency market
under sanctions. Economic Policy, 41(125), 76 - 101. https://doi.org/10.1093/epolic/eiag013 Copy Share Abstract Tariffs,
trade wars, and financial sanctions have become a common feature of the global economy. In response, many governments
consider departing from the Washington Consensus and adding unconventional tools such as foreign exchange interventions,
capital controls, and financial repression. This paper asks when, and how, financial repression can be used in the
currency market, and how it compares with foreign exchange (FX) interventions and conventional monetary and fiscal
policy. We show that although the use of financial repression is welfare-reducing in response to international shocks,
even when FX interventions are fully constrained, it can be effectively used for redistributive and fiscal reasons.
Greater international financial isolation makes financial repression more potent in extracting fiscal surplus from the
private sector. Item Type Article Copyright holders © 2026 The Author(s) Departments LSE > Academic Departments >
Economics DOI 10.1093/epolic/eiag013 Date Deposited 3 September 2026 Acceptance Date 8 April 2026 URI
https://researchonline.lse.ac.uk/id/eprint/140876 Explore Further Mukhin, Dmitry HG FinanceHF Commerce
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https://academic.oup.com/economicpolicy/article/41/125/76/8696438?login=true Close picture_as_pdf subject Accepted
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