Jonathan Chiu - Latest

• On the Fragility of DeFi Lending

  Staff Working Paper 2023-14 Jonathan Chiu, Emre Ozdenoren, Kathy Yuan, Shengxing Zhang

  We develop a dynamic model to capture key features of decentralized finance lending. We identify a price-liquidity feedback: the market outcome in any given period depends on agents' expectations about lending activities in future periods, with higher future price expectations leading to more lending and higher prices in that period.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Financial stability JEL Code(s): G, G0, G01, G1, G10

• 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 Topic(s): Central bank research, Digital currencies and fintech, Financial institutions, Financial stability JEL Code(s): E, E5, E50, E58, G, G0, G00, L, L0, L00

• Grasping De(centralized) Fi(nance) Through the Lens of Economic Theory

  Staff Working Paper 2022-43 Jonathan Chiu, Charles M. Kahn, Thorsten Koeppl

  We analyze the value proposition and limitations of decentralized finance (DeFi). Based on a distributed ledger and smart contracts, DeFi can guarantee the execution of financial contracts, potentially lowering the costs of intermediation and improving financial inclusion.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Payment clearing and settlement systems JEL Code(s): G, G2

• PayTech and the D(ata) N(etwork) A(ctivities) of BigTech Platforms

  Staff Working Paper 2022-35 Jonathan Chiu, Thorsten Koeppl

  Why do BigTech platforms introduce payment services? We explore this using a model in which a monopoly platform faces a trade-off between the costs associated with privacy concerns and the revenue from data services. We then analyze the feedback effects between data and payments.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Payment clearing and settlement systems JEL Code(s): D, D8, E, E4, E42, L, L1

• What Drives Bitcoin Fees? Using Segwit to Assess Bitcoin's Long-Run Sustainability

  Staff Working Paper 2022-2 Colin Brown, Jonathan Chiu, Thorsten Koeppl

  We explore what drives transaction fees in the Bitcoin system and consider whether Bitcoin can remain tamper proof in the long run.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Payment clearing and settlement systems JEL Code(s): E, E4, E42, G, G2

• 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 Topic(s): Digital currencies and fintech, Monetary policy, Monetary policy framework JEL Code(s): E, E5, E50, E58

• Payments on Digital Platforms: Resiliency, Interoperability and Welfare

  Staff Working Paper 2021-19 Jonathan Chiu, Tsz-Nga Wong

  This paper studies the business model choice between running a cash platform and a token platform, as well as its welfare and policy implications.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Monetary policy, Payment clearing and settlement systems JEL Code(s): E, E4, E5, L, L5

• 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 Topic(s): Central bank research, Digital currencies and fintech, Financial institutions, Payment clearing and settlement systems JEL Code(s): E, E4, E42, E5, E50, G, G2, G21

• Short-Run Dynamics in a Search-Theoretic Model of Monetary Exchange

  Staff Working Paper 2020-48 Jonathan Chiu, Miguel Molico

  We study the short-run effects of monetary policy using a search-theoretic monetary model in which agents are subject to idiosyncratic shocks and aggregate monetary shocks.

  Content Type(s): Staff research, Staff working papers Topic(s): Inflation and prices, Monetary policy, Monetary policy transmission JEL Code(s): E, E4, E40, E5, E50

• The Economics of Cryptocurrencies—Bitcoin and Beyond

  Staff Working Paper 2019-40 Jonathan Chiu, Thorsten Koeppl

  Since the creation of Bitcoin in 2009, over 2,000 cryptocurrencies have been issued. We evaluate how well a cryptocurrency functions as a payment system.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Monetary policy, Payment clearing and settlement systems JEL Code(s): E, E4, E5, L, L5