Bio

Jonathan Chiu is a Senior Research Advisor in the Banking and Payments Department (BAP). 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.


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Staff discussion papers

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.

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Staff working papers

Safe Payments

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.

Bank Market Power and Central Bank Digital Currency: Theory and Quantitative Assessment

Many central banks are considering whether to issue a new form of electronic money that would be accessible to the public. This new form is usually called a central bank digital currency (CBDC). Issuing a CBDC would have implications for the financial system and, more broadly, the wider economy.

Blockchain-Based Settlement for Asset Trading

Staff Working Paper 2018-45 Jonathan Chiu, Thorsten Koeppl
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.

Incentive Compatibility on the Blockchain

Staff Working Paper 2018-34 Jonathan Chiu, Thorsten Koeppl
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.

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.

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?

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Bank publications

Bank of Canada Review articles

November 17, 2011

Liquidity Provision and Collateral Haircuts in Payments Systems

Central banks play a pivotal role in well-functioning payments systems by providing liquidity via collateralized lending. This article discusses the role of collateral and haircut policy in central bank lending, as well as the distinguishing features of the central bank’s policy relative to private sector practices. It presents a model that explicitly incorporates the unique role of central banks in the payments system and argues that central banks must consider how their haircut policies affect the relative price and liquidity of assets, the market’s asset allocation, and the likelihood of participants to default. Furthermore, under extraordinary circumstances, there is a rationale for the central bank to temporarily reduce haircuts or broaden the list of eligible collateral to mitigate the shortage of liquidity in the market.

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Journal publications

Journal articles

Other

Book chapter

Research