Jonathan Chiu is a Senior Research Advisor in the Funds Management and Banking Department (FBD). His main research interests concern monetary theory, banking, payments and financial infrastructures. He also teaches monetary theory at Queen’s University. Jonathan received his PhD in economics from the University of Western Ontario.
Will a central bank digital currency (CBDC) reduce commercial banks’ intermediation? Responding to this widespread concern, we show—on the contrary—that when banks have market power, a CBDC can in fact promote bank intermediation.
Can securities be settled on a blockchain and, if so, what are the gains relative to existing settlement systems? We consider a blockchain that ensures delivery versus payment by linking transfers of assets with payments and operates using a proof-of-work protocol. The main benefit of a blockchain is faster and more flexible settlement, whereas the challenge is to avoid settlement fails when participants fork the chain to get rid of trading losses.
A blockchain is a digital ledger that keeps track of a record of ownership without the need for a designated party to update and enforce changes to the record. The updating of the ledger is done directly by the users of the blockchain and is traditionally governed by a proof-of-work (PoW) protocol.