nep-pay New Economics Papers
on Payment Systems and Financial Technology
Issue of 2022‒04‒04
eleven papers chosen by

  1. The Ebb of Fiat and the Flow of Cryptocurrency By De Castro, Angelo
  2. The Coming Battle of Digital Currencies By Cong, Lin William; Mayer, Simon
  3. Governable Spaces: A Feminist Architecture for Platform Policy By Schneider, Nathan
  4. Constructing a NFT Price Index and Applications By Hugo Schnoering; Hugo Inzirillo
  5. Darwin Among the Cryptocurrencies By Bernhard K. Meister; Henry C. W. Price
  6. Las pensiones y las nuevas formas d2 e3pleo de la revolución digital By María Luz Rodríguez Fernández
  7. Yields: The Galapagos Syndrome Of Cryptofinance By Bernhard K. Meister; Henry C. W. Price
  8. Information vs Competition : How Platform Design Affects Profits and Surplus By Piolatto, A.; Schuett, Florian
  9. Liquidity Risk and Interdependence in Payment Systems: The Case of Peru By Jushua Baldoceda; Anthony Meza
  10. Information vs Competition : How Platform Design Affects Profits and Surplus By Piolatto, A.; Schuett, Florian
  11. The Evolution of U.S. Retail Concentration By Dominic A. Smith; Sergio Ocampo

  1. By: De Castro, Angelo
    Abstract: This paper examines various models and strategies for the adoption of cryptocurrencies, arguments on the stabilization of their value, and the relationship between artificial intelligence and blockchain technology.
    Date: 2022–02–16
  2. By: Cong, Lin William; Mayer, Simon
    Abstract: We model the dynamic global competition among national fat currencies, cryptocurrencies, and Central Bank Digital Currencies (CBDCs) in which the strength of a country and of its currency are mutually reinforcing. The rise of cryptocurrencies hurts stronger fat currencies, but can beneft weaker fat currencies by reducing competition from stronger ones. Countries strategically implement CBDCs in response to competition from emerging cryptocurrencies and other currencies. Our model suggests the following pecking order: Countries with strong but non-dominant currencies (e.g., China) are most incentivized to launch CBDC due to both technological frst-mover advantage and potential reduction in dollarization; the strongest currencies (e.g., USD) beneft from developing CBDC early on to nip cryptocurrency growth in the bud and to counteract competitors’ CBDCs; nations with the weakest currencies forgo implementing CBDCs and adopt cryptocurrencies instead. Strong fat competition and the emergence of cryptocurrencies spur fnancial innovation and digital currency development. Our fndings help rationalize recent developments in currency and payment digitization, while providing insights into the global battle of currencies and the future of money.
    Keywords: Financial Economics
    Date: 2022–03–28
  3. By: Schneider, Nathan (University of Colorado Boulder)
    Abstract: Feminist tradition reveals with particular clarity how the online economy has contrived to be both apparently open and persistently unaccountable. Diverse feminist critiques amount to an overlapping insistence that the systems that organize our technology should be governable by the people who rely on them. This article extrapolates from feminist insights and experiences toward a policy agenda for vexing challenges in three domains of the online economy: social-media communities, platform-mediated work, and network infrastructure. The agenda calls for crafting “governable spaces” through diverse and accountable forms of user participation.
    Date: 2022–03–22
  4. By: Hugo Schnoering; Hugo Inzirillo
    Abstract: We are witnessing the emergence of a new digital art market, the art market 3.0. Blockchain technology has taken on a new sector which is still not well known, Non-Fungible tokens (NFT). In this paper we propose a new methodology to build a NFT Price Index that represents this new market on the whole. In addition, this index will allow us to have a look on the dynamics and performances of NFT markets, and to diagnose them.
    Date: 2022–02
  5. By: Bernhard K. Meister; Henry C. W. Price
    Abstract: The paper highlights some commonalities between the development of cryptocurrencies and the evolution of ecosystems. Concepts from evolutionary finance embedded in toy models consistent with stylized facts are employed to understand what survival of the fittest means in cryptofinance. Stylized facts for ownership, trading volume and market capitalization of cryptocurrencies are selectively presented in terms of scaling laws.
    Date: 2022–02
  6. By: María Luz Rodríguez Fernández
    Abstract: En este paper se explican las razones de la desprotección social en que se hallan los trabajadores de la economía de plataforma por desarrollar un empleo atípico y autónomo. Ello viene en mucha medida motivado porque los modelos de seguridad social bismarckiano y de Beveridge se han configurado teniendo en cuenta el empleo típico, de manera que proporcionan menor protección a quienes desarrollan empleos atípicos, incluidos los trabajadores autónomos, que es la fórmula de empleo que se utiliza por las plataformas digitales.
    Date: 2021–02
  7. By: Bernhard K. Meister; Henry C. W. Price
    Abstract: In this chapter structures that generate yield in cryptofinance will be analyzed and related to leverage. While the majority of crypto-assets do not have intrinsic yields in and of themselves, similar to cash holdings of fiat currency, revolutionary innovation based on smart contracts, which enable decentralised finance, does generate return. Examples include lending or providing liquidity to an automated market maker on a decentralised exchange, as well as performing block formation in a proof of stake blockchain. On centralised exchanges, perpetual and finite duration futures can trade at a premium or discount to the spot market for extended periods with one side of the transaction earning a yield. Disparities in yield exist between products and venues as a result of market segmentation and risk profile differences. Cryptofinance was initially shunned by legacy finance and developed independently. This led to curious and imaginative adaptions, reminiscent of Darwin's finches, including stable coins for dollar transfers, perpetuals for leverage, and a new class of exchanges for trading and investment.
    Date: 2022–02
  8. By: Piolatto, A. (Tilburg University, TILEC); Schuett, Florian (Tilburg University, TILEC)
    Keywords: anonymous information platforms; opaque products; horizontal competition; experience goods; mismatch costs
    Date: 2022
  9. By: Jushua Baldoceda (Central Reserve Bank of Peru); Anthony Meza (Central Reserve Bank of Peru)
    Abstract: The failure of a financial institution (banks and microfinance institutions) to meet its payment obligations can have implications, not only for its continuity, but also for the stability of payment systems, markets, and the financial system in general. Central banks, as monetary authorities, regulators, and overseers of a country's payment infrastructures must monitor the liquidity risk of participants in those systems in order to prevent in time any event of this nature. To do this, the liquidity needs of the entities must be identified and anticipated to mitigate the possible effects of their inability to pay and the possible consequences on the payment systems. This paper reviews the literature on liquidity risks and their systemic consequences. It also presents different indicators of liquidity and interdependence built with the transactional data of the RTGS System, administered by the Central Reserve Bank of Peru. These indicators are contrasted with the participant's intraday facilities operations in the RTGS (from Jan-2010 to Nov-2021), in order to assess the liquidity problem and its consequences from a systemic point of view.
    Keywords: RTGS; liquidity risk; systemic risk; indicators
    JEL: E42 E50 E58
    Date: 2022–03–07
  10. By: Piolatto, A. (Tilburg University, Center For Economic Research); Schuett, Florian (Tilburg University, Center For Economic Research)
    Keywords: anonymous information platforms; opaque products; horizontal competition; experience goods; mismatch costs
    Date: 2022
  11. By: Dominic A. Smith; Sergio Ocampo
    Abstract: Increases in national concentration have been a salient feature of industry dynamics in the U.S. and have contributed to concerns about increasing market power. Yet, local trends may be more informative about market power, particularly in the retail sector where consumers have traditionally shopped at nearby stores. We find that local concentration has increased almost in parallel with national concentration using novel Census data on product-level revenue for all U.S. retail stores. The increases in concentration are broad based, affecting most markets, products, and retail industries. We implement a new decomposition of the national Herfindahl Hirschman Index and show that despite similar trends, national and local concentration reflect different changes in the retail sector. The increase in national concentration comes from consumers in different markets increasingly buying from the same firms and does not reflect changes in local market power. We estimate a model of retail competition which links local concentration to markups. The model implies that the increase in local concentration explains one-third of the observed increase in markups.
    Keywords: Retail, Local Markets, Concentration, Herfindahl-Hirschman Index
    JEL: L8
    Date: 2022–03

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