Jonathan Chiu

Principal Researcher

Jonathan Chiu is a Principal Researcher in the Funds Management and Banking Department (FBD). His main research interests concern monetary theory, payments, banking and financial infrastructures. Specific topics include distributive effects of monetary policy, and asset market freezes and recoveries. Jonathan received his PhD in economics from the University of Western Ontario.


Jonathan Chiu

Principal Researcher
Funds Management and Banking

Bank of Canada
234 Wellington Street
Ottawa, ON, K1A 0G9


Relationships in the Interbank Market

Staff Working Paper 2016-33 Jonathan Chiu, Cyril Monnet
The market for central bank reserves is mainly over-the-counter and exhibits a core-periphery network structure. This paper develops a model of relationship lending in the unsecured interbank market. In equilibrium, a tiered lending network arises endogenously as banks choose to build relationships to insure against liquidity shocks and to economize on the cost to trade in the interbank market.

On the Essentiality of E-Money

Staff Working Paper 2015-43 Jonathan Chiu, Tsz-Nga Wong
Recent years have witnessed the advances of e-money systems such as Bitcoin, PayPal and various forms of stored-value cards. This paper adopts a mechanism design approach to identify some essential features of different payment systems that implement and improve the constrained optimal resource allocation.

Public Policy Objectives and the Next Generation of CPA Systems: An Analytical Framework

Staff Discussion Paper 2015-6 James Chapman, Jonathan Chiu, Sajjad Jafri, Héctor Pérez Saiz
The payments landscape in Canada is rapidly changing and will continue to evolve, fuelled by strong and persistent drivers. In Canada, the Canadian Payments Association (CPA) is on a path to modernize Canada’s core payment systems.

E-Money: Efficiency, Stability and Optimal Policy

Staff Working Paper 2014-16 Jonathan Chiu, Tsz-Nga Wong
What makes e-money more special than cash? Is the introduction of e-money necessarily welfare enhancing? Is an e-money system necessarily stable? What is the optimal way to design an efficient and stable e-money scheme?

On the Welfare Effects of Credit Arrangements

Staff Working Paper 2012-43 Jonathan Chiu, Mei Dong, Enchuan Shao
This paper studies the welfare effects of different credit arrangements and how these effects depend on the trading mechanism and inflation. In a competitive market, a deviation from the Friedman rule is always sub-optimal. Moreover, credit arrangements can be welfare-reducing, because increased consumption by credit users will drive up the price level so that money users have to reduce consumption when facing a binding liquidity restraint.

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Journal Articles

  • “Liquidity, Redistribution, and the Welfare Cost of Inflation”
    (with Miguel Molico) in Journal of Monetary Economics, Volume 57(4), p. 428-438, May 2010.
  • “Uncertainty, Welfare and Inflation”
    (with Miguel Molico) in Journal of Money, Credit, and Banking, Volume 43, p. 487-512, October 2011.
  • “Financial Intermediation, Liquidity and Inflation”
    (with Cesaire Meh) in Macroeconomic Dynamics, Volume 15, p. 83-118, April 2011.
  • “Central Bank Haircut Policy”
    (with James Chapman and Miguel Molico) in Annals of Finance, Volume 7(3), p. 319-348, August 2011.
  • “A Model of Tiered Settlement”
    (with James Chapman and Miguel Molico) in Journal of Money, Credit, and Banking, Volume 45, Issue 2-3, pages 327–347, March-April 2013.
  • “Endogenously Segmented Asset Market in an Inventory Theoretic Model of Money Demand”
    in Macroeconomic Dynamics, Volume 18, p 438-472, March 2014.
  • “Innovation and Growth with Financial, and other, Frictions”
    (with Cesaire Meh and Randall Wright) in International Economic Review, Forthcoming.
  • Trading Dynamics with Adverse Selection and Search: Market Freeze, Intervention and Recovery
    (with Thorsten Koeppl) in Review of Economic Studies, July 2016, Volume 83, Issue 3, Pages 969-1000.

Other Research

  • “On the Welfare Effects of Credit Arrangements”
    (with Mei Dong and Enchuan Shao).
  • “Relationships in the Interbank Market”
    (with Cyril Monnet).
  • “Livin' on the Edge with Ratings: Liquidity, Efficiency and Fragility””
    (with Thor Koeppl).


  • Ph.D. in Economics, University of Western Ontario, 2005

Research Interests

  • Monetary Economics
  • Payments Economics
  • Banking


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