Bio

Mohammad Davoodalhosseini is the Director of the Research Team in the Banking and Payments (BAP) Department. He joined the Bank in 2015 as a Senior Economist after completing his Ph.D. in Economics at the Pennsylvania State University. Since then, he has held roles including Principal Researcher and Research Advisor in BAP.

His main research interests are monetary economics and search theory. In monetary economics, he studies emerging developments in electronic money and payments, particularly how the introduction of a Central Bank Digital Currency (CBDC) can impact the implementation and transmission of monetary policy, as well as the efficiency and stability of the financial system. Most recently, he explores how tokenization of assets can change the financial landscape. In search theory, he examines how information asymmetries and trading frictions shape market outcomes in various settings, including interbank, labor, and over-the-counter markets.

His work has been published in academic journals such as Journal of Political Economy, Journal of Economic Theory, Management Science, International Economic Review, and Journal of Economic Dynamics and Control.

Research Field(s): Macroeconomic Theory Monetary Economics Money and Banking

Staff research

Central Bank Digital Currency and Transmission of Monetary Policy

Staff working paper 2024-27 Saroj Bhattarai, Mohammad Davoodalhosseini, Zhenning Zhao
Using a general equilibrium model with nominal rigidities and financial frictions, we explore whether introducing a central bank digital currency (CBDC) affects the transmission of monetary policy, and how the effects depend on CBDC design features. We also study whether paying interest on central bank liabilities is contractionary or expansionary.
Content Type(s): Staff research, Staff working papers JEL Code(s): E, E3, E31, E4, E5, E58, G, G2, G21, G5, G51 Research Theme(s): Models and tools, Economic models, Monetary policy, Monetary policy framework and transmission, Money and payments, Digital assets and fintech

Central Bank Digital Currencies and Banking: Literature Review and New Questions

Staff discussion paper 2023-4 James Chapman, Jonathan Chiu, Mohammad Davoodalhosseini, Janet Hua Jiang, Francisco Rivadeneyra, Yu Zhu
We review the nascent but fast-growing literature on central bank digital currencies (CBDCs), focusing on their potential impacts on private banks. We evaluate these impacts in three areas of traditional banking: payments, lending and liquidity and maturity transformation. We also take a broader look at CBDCs and highlight two promising directions for future research.
Content Type(s): Staff research, Staff discussion papers JEL Code(s): E, E5, E50, E58, G, G0, G00, L, L0, L00 Research Theme(s): Financial system, Financial institutions and intermediation, Money and payments, Digital assets and fintech, Payment and financial market infrastructures

Central Bank Digital Currency and Banking: Macroeconomic Benefits of a Cash-Like Design

Staff working paper 2021-63 Jonathan Chiu, Mohammad Davoodalhosseini
Should a CBDC be more like cash or bank deposits? An interest-bearing, cash-like CBDC not only makes payments more efficient but also increases total demand. This has positive effects on other transactions, inducing more deposit taking and lending and, thus, bank intermediation.
Content Type(s): Staff research, Staff working papers JEL Code(s): E, E5, E50, E58 Research Theme(s): Financial system, Financial stability and systemic risk, Monetary policy, Monetary policy framework and transmission, Money and payments, Digital assets and fintech, Payment and financial market infrastructures

Safe Payments

Staff working paper 2020-53 Jonathan Chiu, Mohammad Davoodalhosseini, Janet Hua Jiang, Yu Zhu
In a cashless economy, would the private sector invest in the optimal level of safety in a deposit-based payment system? In general, because of externalities, the answer is no. While the private sector could over- or under-invest in safety, the government can use taxes or subsidies to correct private incentives.
Content Type(s): Staff research, Staff working papers JEL Code(s): E, E4, E42, E5, E50, G, G2, G21 Research Theme(s): Money and payments, Digital assets and fintech, Payment and financial market infrastructures, Retail payments

Optimal Taxation in Asset Markets with Adverse Selection

Staff working paper 2020-11 Mohammad Davoodalhosseini
What is the optimal tax schedule in over-the-counter markets, e.g., those for corporate bonds? I find that an optimal tax schedule is often non-monotonic. For example, trading of some high-price assets should be subsidized, and trading of some low-price assets should be taxed.
Content Type(s): Staff research, Staff working papers JEL Code(s): D, D8, D82, D83, E, E2, E24, G, G1, G10, J, J3, J31, J6, J64 Research Theme(s): Financial markets and funds management, Market structure, Financial system, Financial system regulation and oversight

CBDC and Monetary Policy

Staff analytical note 2020-4 Mohammad Davoodalhosseini, Francisco Rivadeneyra, Yu Zhu
Improving the conduct of monetary policy is unlikely to be the main motivation for central banks to issue a central bank digital currency (CBDC). While some argue that a CBDC could allow more complex transfer schemes or the ability to break below the zero lower bound, we find these benefits might be small or difficult to realize in practice.
Content Type(s): Staff research, Staff analytical notes JEL Code(s): E, E4, E41, E5, E51, E52 Research Theme(s): Monetary policy, Monetary policy framework and transmission, Monetary policy tools and implementation, Money and payments, Digital assets and fintech

See More

Journal publications

Journal articles