|
on Payment Systems and Financial Technology |
|
Issue of 2019‒10‒28
eleven papers chosen by |
| By: | Louis Abraham (Ecole polytechnique); Dominique Guégan (University of Paris 1 Panthéon-Sorbonne; Ca’ Foscari University of Venice) |
| Abstract: | Libra was presented as a cryptocurrency on June 18, 2019 by Facebook. On the same day, Facebook announced plans for Calibra, a subsidiary in charge of the development of an electronic wallet and financial services. In view of the primary risk of sovereignty posed by the creation of Libra, the Central Banks quickly took very clear positions against the project and adressed a lot of questions to the responsible of the project focusing on regulation aspects and national sovereignty. The purpose of this paper is to provide a holistic analysis of the project to encompass several aspects of its implementation and the issues it raises. We address a set of questions that are part of the cryptocurrency environment and blockchain technology that supports the Libra project. We identify the main risks considering at the same time: political risks, financial risks, economical risks, technological risks and ethics focusing on the governance of the project based on two levels: one for the Association and the other for the Libra Blockchain. We emphazise the difficulty to regulate such a project as soon as it will depend on several countries whose legislations are very different. The future of this kind of project is discussed through the emergence of the Central Bank Digital Currencies. |
| Keywords: | Blockchain Protocol, Central Bank Digital Currency, Cryptocurrency, Governance, Libra, Regulation, Risk |
| JEL: | C88 E5 G28 K2 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2019:30&r=all |
| By: | Collin Brown; Jonathan Chiu; Thorsten V. Koeppl |
| Abstract: | We use block level data from the Bitcoin blockchain to estimate the impact of congestion and the USD price on average fee rates. The introduction and adoption of the Segwit protocol allows us to identify an aggregate demand curve for bitcoin transactions. We nd that Segwit has reduced fee revenue by about 80%. Fee revenue could be maximized at a blocksize of about 0.6 MB when Segwit adoption remains at 40%. At this blocksize, maximum fee revenue would be roughly 1/8 of the current block reward { or the equivalent of 1.6375 BTC as a reward in the long run given current prices and demand for Bitcoin. |
| Keywords: | Bitcoin, Payment Systems, Fees, Congestion, Segwit Protocol |
| JEL: | E42 G2 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:qed:wpaper:1423&r=all |
| By: | Anil Savio Kavuri; Alistair Milne; Justine Wood |
| Abstract: | In the context of recent developments with cryptocurrencies, as well as the potential rise of central bank digital currencies, we present a new visualisation of money. Using three novel figures, we distinguish between the relevant mechanisms, technologies, recordkeeping, and transactions of various forms of money, as well as the classifications of different types of money; this enables the resolution of omissions and ambiguities in other recent such visualisations (CPMI 2018; Bech and Garratt 2017; Bech and Garratt 2017; CPMI 2015; Wadsworth 2018a; Wadsworth 2018b). This reveals the novelty of cryptocurrencies, which use the software-based cryptographically secured recordkeeping, that support the issue of money with a credible commitment to a limited quantity of issue. We conclude with a discussion of policy implications stemming from our analysis. |
| Keywords: | Money, Cryptocurrencies, Central bank digital currencies, Bitcoin |
| JEL: | B22 E40 E41 E42 E50 E51 E52 E58 E59 E61 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2019-79&r=all |
| By: | Beniak, Patrycja |
| Abstract: | Rapid digitalisation of payments leads to greater cost and time efficiency, yet could also potentially trigger legal and security challenges as well as lead to weakening of finan- cial stability and less effective monetary policy transmission. In order to ensure greater safety, central banks are contemplating and testing solutions thanks to which public using payment innovations could transact in funds that are ultimately backed by central bank. One of these solutions is central bank digital currency, a digital version of cash. The pro- posed versions of central bank digital currency are very diverse. Depending on the version assumed by a particular central bank, central bank digital currency can have an impact on central bank interest rate setting, monetary policy implementation and transmission mechanism. This relates most notably to effective lower bound which could either rise or fall, conditional on design on central bank digital currently. |
| Keywords: | virtual currencies, central bank digital currency, monetary policy, effective lower bound |
| JEL: | E42 E52 E58 G21 G28 |
| Date: | 2019–10–22 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:96663&r=all |
| By: | Amani Moin; Emin G\"un Sirer; Kevin Sekniqi |
| Abstract: | Stablecoins promise to bridge fiat currencies with the world of cryptocurrencies. They provide a way for users to take advantage of the benefits of digital currencies, such as ability to transfer assets over the internet, provide assurance on minting schedules and scarcity, and enable new asset classes, while also partially mitigating their volatility risks. In this paper, we systematically discuss general design, decompose existing stablecoins into various component design elements, explore their strengths and drawbacks, and identify future directions. |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1910.10098&r=all |
| By: | Dobbie, Will (Harvard Kennedy School and NBER); Song, Jae (Social Security Administration) |
| Abstract: | We study the drivers of financial distress using a large-scale field experiment that offered randomly selected borrowers a combination of (i) immediate payment reductions to target short-run liquidity constraints and (ii) delayed interest write-downs to target long-run debt constraints. We identify the separate effects of the payment reductions and interest write-downs using both the experiment and cross-sectional variation in treatment intensity. We find that the interest write-downs significantly improved both financial and labor market outcomes, despite not taking effect for three to five years. In sharp contrast, there were no positive effects of the more immediate payment reductions. These results run counter to the widespread view that financial distress is largely the result of short-run constraints. |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp19-030&r=all |
| By: | Carlo Requi\~ao da Cunha; Roberto da Silva |
| Abstract: | We investigate 17 digital currencies making an analogy with quantum systems and develop the concept of eigenportfolios. We show that the density of states of the correlation matrix of these assets shows a behavior between that of the Wishart ensemble and one whose elements are Cauchy distributed. A metric for the participation matrix based on superposition of Gaussian functions is proposed and we show that small eigenvalues correspond to localized states. Nonetheless, some level of localization is also present for bigger eigenvalues probably caused by the fat tails of the distribution of returns of these assets. We also show through a clustering study that the digital currencies tend to stagger together. We conclude the paper showing that this correlation structure leads to an Epps effect. |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1910.08627&r=all |
| By: | Piotr Denderski; Florian Sniekers |
| Abstract: | Has the access to broadband Internet changed the composition of employment between payroll and self-employment? We propose a new theory of self-employment based on frictions in the goods and labour market and use variation in broadband access across a panel of OECD countries to test the theory’s empirical predictions. To account for the possible endogeneity of broadband Internet, we instrument broadband adoption by a logistic diffusion model in which the availability of pre-existing technologies predicts broadband penetration. We find that faster Internet prompts more self-employment and lower unemployment. In our theory, this combination implies that the overall improvements in market efficiency stemming from advances in ICT are stronger in the goods than in the labour market. |
| Keywords: | Self-employment, Internet, Gig economy |
| JEL: | J23 O33 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:19/13&r=all |
| By: | Acemoglu, Daron (MIT); Restrepo, Pascual (Boston University) |
| Abstract: | Artificial Intelligence is set to influence every aspect of our lives, not least the way production is organized. AI, as a technology platform, can automate tasks previously performed by labor or create new tasks and activities in which humans can be productively employed. Recent technological change has been biased towards automation, with insufficient focus on creating new tasks where labor can be productively employed. The consequences of this choice have been stagnating labor demand, declining labor share in national income, rising inequality and lower productivity growth. The current tendency is to develop AI in the direction of further automation, but this might mean missing out on the promise of the "right" kind of AI with better economic and social outcomes. |
| Keywords: | automation, artificial intelligence, jobs, inequality, innovation, labor demand, productivity, tasks, technology, wages |
| JEL: | J23 J24 |
| Date: | 2019–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12704&r=all |
| By: | Christian Pfister |
| Abstract: | This paper investigates the real effects of short-term financial constraints in the light of the working capital channel: cash credit constraints may force SMEs to forgo investment opportunities in order to finance their working capital needs. Building on unique indicators of cash and investment credit constraints derived from survey data, I find that: (1) short-term credit constraints are as important as long-term ones in SMEs' investment decisions; (2) the detrimental effect of cash credit constraints on corporate investment is even stronger for firms with higher working capital needs; (3) the negative relationship between working capital and fixed investment is associated with short-term financial frictions; and (4) only liquid SMEs are able to offset short-term financial frictions by adjusting their accounts receivable and inventories. |
| Keywords: | : Central Bank, Currency, Digitalisation, Financial Stability, Monetary Policy. |
| JEL: | E40 E42 E52 E58 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:732&r=all |
| By: | Bakari, Sayef; Tiba, Sofien |
| Abstract: | The purpose of this paper is to treat the impact of the internet on growth for a sample in the case 4 economies of the North Africa over the period 1995-2017 using various techniques such as the ARDL bounds testing approach, Panel ARDL Model, OLS Fixed Effect, OLS Random Effect, FMOLS, 2 SLS, RLS, GLM, and GMM. Indeed, for the time series results, the ARDL highlights reported the presence of a negative impact of the internet on economic growth in Algeria, Egypt, Morocco, and Tunisia. Also, the main results of the Panel data models confirm the fact that the internet exerts a significant negative impact on growth for North Africa as a whole. These economies are invited to orient the use of the internet towards productive ways in order to reap the benefits of the spread of the internet and proactively enhance the prosperity in this region as a whole. |
| Keywords: | Internet use, economic growth, North Africa |
| JEL: | O3 O35 O4 O47 O55 O57 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:96629&r=all |