Miguel Molico was appointed Senior Director, Climate Analysis Team in the Financial Stability Department (FSD) in September 2020. In this role, he oversees the Bank’s analysis and research on the macroeconomic and financial stability implications of climate change.

He previously held the role of Senior Research Director in FSD from 2014 to 2020, and Director of Research in the Funds Management and Banking Department (FBD) between 2010 and 2014. Prior to joining the Bank in 2006, Miguel held academic positions at the University of Western Ontario and Penn State University. He holds a PhD in economics from the University of Pennsylvania.

Miguel primary research interests include monetary theory, monetary policy implementation, climate change, and payment systems. His research has been published in leading academic journals, including the Journal of Monetary Economics, the Journal of Economic Theory, the International Economic Review, the Review of Economic Dynamics, and the Journal of Money, Credit and Banking.

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Staff discussion papers

On the Nexus of Monetary Policy and Financial Stability: Effectiveness of Macroprudential Tools in Building Resilience and Mitigating Financial Imbalances

Staff Discussion Paper 2016-11 H. Evren Damar, Miguel Molico
This paper reviews the Canadian and international evidence of the effectiveness of macroprudential policy measures in building resilience and mitigating financial imbalances. The analysis concludes that these measures have broadly achieved their goal of increasing the overall resilience of the financial system to the buildup of imbalances and increasing the financial system’s ability to withstand adverse shocks.

On the Nexus of Monetary Policy and Financial Stability: Recent Developments and Research

Staff Discussion Paper 2015-7 Oleksiy Kryvtsov, Miguel Molico, Ben Tomlin
Because financial and macroeconomic conditions are tightly interconnected, financial stability considerations are an important element of any monetary policy framework. Yet, the circumstances under which it would be appropriate for the Bank to use monetary policy to lean against financial risks need to be more fully specified (Côté 2014).

Electronic Money and Payments: Recent Developments and Issues

Staff Discussion Paper 2014-2 Ben Fung, Miguel Molico, Gerald Stuber
The authors review recent developments in retail payments in Canada and elsewhere, with a focus on e-money products, and assess their potential public policy implications.

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Staff working papers

Central Bank Haircut Policy

Staff Working Paper 2010-23 James Chapman, Jonathan Chiu, Miguel Molico
We present a model of central bank collateralized lending to study the optimal choice of the haircut policy. We show that a lending facility provides a bundle of two types of insurance: insurance against liquidity risk as well as insurance against downside risk of the collateral.

Uncertainty, Inflation, and Welfare

Staff Working Paper 2008-13 Jonathan Chiu, Miguel Molico
This paper studies the welfare costs and the redistributive effects of inflation in the presence of idiosyncratic liquidity risk, in a micro-founded search-theoretical monetary model. We calibrate the model to match the empirical aggregate money demand and the distribution of money holdings across households, and study the effects of inflation under the implied degree of market incompleteness.

A Model of Tiered Settlement Networks

Staff Working Paper 2008-12 James Chapman, Jonathan Chiu, Miguel Molico
This paper develops a model of settlement system to study the endogenous structure of settlement networks, and the welfare consequences of clearing agent failure. The equilibrium degree of tiering is endogenously determined by the cost structure and the information structure.
Content Type(s): Staff research, Staff working papers Topic(s): Payment clearing and settlement systems JEL Code(s): E, E4, E42, E5, E58, G, G2, G21

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Bank publications

Bank of Canada Review articles

May 17, 2012

Conference Summary: New Developments in Payments and Settlement

The Bank of Canada’s annual conference, held in November 2011, brought together leading researchers from universities, central banks and other institutions from around the world. Divided into four sessions plus two keynote addresses, the conference covered such topics as the use of cash and other means of payment in retail transactions, large-value payments systems, and […]
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

Refereed journals

  • "Central Bank Haircut Policy," (with James Chapman and Jonathan Chiu) Annals of Finance, August 2011, 7 (3), p.319-348.
  • "Uncertainty, Inflation, and Welfare," (with Jonathan Chiu) Journal of Money, Credit, and Banking, 43: 487-512.
  • "Liquidity, Redistribution, and the Welfare Cost of Inflation," (with Jonathan Chiu) Journal of Monetary Economics, 57 (4) 2010:428-38.
  • "The Distribution of Money and Prices in Search Equilibrium," International Economic Review, 47 (3), 2006: 701-22.
  • "Indivisibilities, Lotteries, and Monetary Exchange," (with Alexander Berentsen and Randall Wright), Journal of Economic Theory, 107 (1) 2002: 70-94.



  • "A Model of Tiered Settlement",
    (with J, chapman and J. Chiu), Journal of Money, credit and Banking.
  • "Production Synergies, Technology Adoption, Unemployment, and Wages",
    (with Gwen Eudey), Finance and Economics Discussion Series, 2001-29, Federal Reserve Board, Washington, DC.