|
on Payment Systems and Financial Technology |
| By: | Aquilina, Matteo; Cornelli, Giulio; Frost, Jon; Gambacorta, Leonardo |
| Abstract: | Cryptocurrencies and decentralised finance (DeFi) aim to replicate many of the economic functions of traditional finance (TradFi), but their distinctive features introduce new financial stability risks. We analyse these features, and examine key developments, such as smart contracts, decentralised exchanges (DEXs), stablecoins and new forms of central bank money. Our findings suggest that while the underlying economic drivers are not different than in TradFi, DeFi poses significant challenges, including new forms of information asymmetries, market inefficiencies and the risk of cryptoisation in emerging markets. We propose tailored regulatory interventions, such as embedding rules within smart contracts and strengthening the oversight of stablecoins, to manage financial stability risks. Finally, we provide a framework for prudential regulation that can mitigate risks while fostering innovation in the rapidly evolving crypto ecosystem. |
| Keywords: | Decentralised Finance; Financial stability; smart contract; Central bank digital currency; Stablecoins; Cryptocurrencies |
| JEL: | E42 G23 G28 O33 F38 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20178 |
| By: | Kenechukwu E. Anadu; Pablo D. Azar; Sean Baker; Marco Cipriani; Thomas M. Eisenbach; Gabriele La Spada; Mattia Landoni; Marco Macchiavelli; J. Christina Wang |
| Abstract: | Stablecoins are digital assets whose value is pegged to that of a fiat currency, typically the U.S. dollar at a peg of $1.00 per token. In a previous blog post, we described the rapid growth of stablecoins through early 2025, highlighted changes in stablecoins’ reserve-asset composition, and examined their reactions to Bitcoin price shocks. In this post, we document the growth of stablecoins since our last post. Then, we examine how shocks from outside the crypto industry can impact the composition of stablecoins’ reserve assets. For our case study, we use the 2023 failure of Silicon Valley Bank (SVB) and its impact on USD Coin (USDC, issued by Circle), the second-largest stablecoin by market capitalization. |
| Keywords: | stablecoins; fintech; money-like assets; GENIUS Act |
| JEL: | G1 G11 G15 G28 |
| Date: | 2026–07–31 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:103583 |
| By: | Seth Dunbar; Pon Sagnanert; Alessio Saretto; Guhan Venkatu |
| Abstract: | Commercial banks have begun exploring adoption of tokenized deposits, traditional deposits that rely on blockchain technology and allow payments to settle almost instantaneously. |
| Date: | 2026–07–14 |
| URL: | https://d.repec.org/n?u=RePEc:fip:d00001:103564 |
| By: | Pietro Saggese; Michael Sigmund; Burkhard Raunig; Esther Segalla; Bernhard Haslhofer; Christos A. Makridis |
| Abstract: | Cryptoassets are increasingly entangled with the traditional financial system, and how this activity integrates into national economies and behaves under stress bears on financial stability and the design of public digital money. However, blockchain pseudonymity and the lack of geographic identifiers force existing work to rely on indirect proxies to infer and locate market participants. Here we use a regulatory registry that directly identifies the on-chain addresses of all crypto-asset service providers (CASPs) registered in Austria, reconstructing their on-chain transaction activity across Bitcoin, Ether, USDC, and USDT through May 2025, and separating retail-like from institutionally mediated flows. We find that Austrian CASPs intermediate roughly $30 billion with external counterparties and are integrated globally rather than domestically. In value, this activity is dominated by a few institutional counterparties; in number, by retail-like ones. Around three major shocks, the Terra-Luna collapse, the FTX bankruptcy, and the Silicon Valley Bank failure, the two groups respond through different mechanisms, and stablecoins do not act as a uniform safe haven. The clearest case is SVB, where retail-like deposits and institutional withdrawals are consistent with USDC's two-tiered redemption mechanism. These patterns are invisible in aggregate data. Registry-based, transaction-level measurement thus offers a reproducible, cross-jurisdictional basis for monitoring how cryptoasset markets transmit risk. |
| Keywords: | cryptoasset, stablecoin, crypto asset service providers, blockchain, Bitcoin, Ethereum |
| JEL: | C81 E42 E58 F31 G19 G23 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12823 |
| By: | Sebastián Katz (Central Bank of Argentina) |
| Abstract: | Among the diverse impacts of digital technologies, one of the most significant concerns their repercussions on the evolution of payment systems. Consequently, the methods by which value is stored, recorded, and transferred, as well as the manner in which transactions are conducted, areundergoing accelerated transformation. Several recent developments merit particular attention. On one hand, numerous economies have witnessed an intensification of pre-existing trends toward the reduction of cash usage in transactional activities. On the other hand, the emergence of the crypto ecosystem presents substantial opportunities alongside significant challenges and risks.A pertinent question in this regard is whether these shifts in the payment landscape—which involve the rise of new actors, markets, and potential institutional arrangements—entail more profound changes in the operational logic of the monetary and credit systems. This is the central inquiry of the present study, which examines how these developments interact with the established monetary and financial system, the policy responses and initiatives of regulatory authorities (e.g., CBDC, Fast Payment Systems, and the impetus toward tokenization), and the eventual consequences for the morphology of money and credit as they are currently understood. |
| Keywords: | banks, digitalization, money, payment systems |
| JEL: | E02 E42 E51 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:bcr:wpaper:2026119 |
| By: | Fabian Schär; Dario Thürkauf; David Yermack |
| Abstract: | We develop a model of aberrant behavior by Bitcoin miners and test it with a new 2017-2025 dataset. Miners’ rewards, comprised partly of user fees, exhibit variability across blocks of transactions. When large reward disparities exist between adjacent blocks, miners have incentives to attempt alternative versions of prior blocks and claim other miners’ rewards for themselves. Regression analysis shows that fee differentials are associated with these attacks and longer waiting times between blocks. These patterns imply potential destabilization of the Bitcoin blockchain as future mining rewards become more volatile due to gradual withdrawal of fixed block subsidies. |
| JEL: | G23 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35443 |
| By: | Bernardo Candia; Olivier Coibion; Yuriy Gorodnichenko; Michael Weber |
| Abstract: | Using repeated large-scale surveys of US households, we study the cryptocurrency investment decisions and motives of households relative to other financial assets. Cryptocurrency holders tend to be young, male, and more libertarian relative to non-crypto holders. Crypto holders expect much higher rates of return for crypto and perceive it as relatively safer than non-holders do. For those holding cryptocurrencies, changes in Bitcoin prices translate into their purchases of durable goods. Finally, information about historical returns of cryptocurrencies in an information provision experiment embedded in the survey leads individuals to increase their desired crypto holdings and increases their actual cryptocurrency purchases subsequently. We compare these views and behaviors to those of households toward other financial assets and argue that cryptocurrency is unique in many of these respects. |
| JEL: | E4 G5 D8 |
| Date: | 2026–07–14 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedcwq:103570 |
| By: | Karau, Sören; Moench, Emanuel |
| Abstract: | We study the implications of Bitcoin's security model for its market valuation. We identify mining shocks by exploiting exogenous variation in mining intensity using a narrative approach in a structural Vector Autoregression. While their impact on transaction speed is short-lived, mining shocks persistently affect trading volumes and market valuations, explaining up to 15 percent of Bitcoin's substantial price variation. Our findings can be rationalized in a theoretical framework where mining shocks affect the likelihood to withstand potential attacks and as such impact investor beliefs about the future state of the network and thus Bitcoin’s usefulness as a means of payment. |
| Keywords: | Bitcoin; Blockchain; Mining; Proxy var |
| JEL: | E42 G32 L14 O16 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20141 |
| By: | Georgarakos, Dimitris; Kenny, Geoff; Laeven, Luc; Meyer, Justus |
| Abstract: | We field a series of experiments in a population-representative survey of European consumers to examine their attitudes towards the possible introduction of a digital euro. First, we show that a short video explaining the key features of the digital euro is effective in changing consumers’ beliefs about such a new form of payment and increases the likelihood of adoption by 12pp relative to a control group that is not shown the video. Second, we find that on aggregate consumers would allocate a relatively small fraction from a positive wealth shock to digital euros and their allocation to other liquid assets would be little affected. Third, holding limits in the range of €1, 000 to €10, 000 have insignificant differential effects on the composition of liquid asset holdings. We also show that a non-trivial fraction of consumers report that they will not adopt the digital euro due to strong preferences for existing forms of payment. |
| Keywords: | Consumer behavior; Central bank digital currencies; Payments; Money; Survey experiments |
| JEL: | E41 E58 D12 D14 G51 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19997 |
| By: | Andras Komaromi; Federico Grinberg; Mr. Diego A. Cerdeiro; Yang Liu |
| Abstract: | Understanding financial activity beyond traditional regulatory frameworks is essential for policymakers. Yet cryptocurrency mining—which offers a direct entry point into the crypto ecosystem without relying on traditional financial intermediaries—remains highly opaque. We propose a novel measurement approach using detailed customs data that tracks exports of crypto mining hardware from the world’s dominant producers. This trade-based proxy allows us to analyze the global distribution of mining hardware imports and identify their key drivers, guided by a stylized model. Empirically, mining surges respond strongly to global factors such as cryptocurrency prices and hardware costs, while domestic factors—including electricity prices and ambient temperature—shape the cross-country distribution of activity. Our findings highlight how global crypto markets, natural endowments, and policy choices jointly influence mining incentives, offering valuable insights for policymakers concerned with financial stability risks and energy subsidy misuse. |
| Keywords: | crypto assets; crypto mining; bitcoin; capital controls |
| Date: | 2026–07–10 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/146 |
| By: | Andrea Panozzo, Lorenzo Spadavecchia, Adam Mugume, Elizabeth Kasekende, Samuel Namwanja Musoke, Mariss Nakayaga, Deo Sande, Anita Mpagi, Nzima Ghislain |
| Abstract: | In developing economies, output statistics arrive with long lags and omit a large informal sector, while digital payment systems record a growing share of transactions in near real time. We assess whether these records improve GDP nowcasts in Uganda, exploiting two national systems that observe complementary segments of the economy: Mobile Money, covering retail and informal transactions, and real-time gross settlement (RTGS), covering large-value formal payments. Within a pseudo-real-time design respecting each series’ publication lag, we augment a conventional macroeconomic panel with payment data across linear and machinelearning models. Payment data cut forecast errors by up to 16 percent and rank among the most informative predictors, with up to over three times the weight of a typical macroeconomic indicator. The improvement delivered by payment data is robust to macroeconomic disturbances, such as the COVID-19 contraction. Placebo tests attribute these gains to economic content, not added predictors. Already held by central banks, payment data offer a timely, low-cost input for surveillance where conventional statistics are weakest. |
| Keywords: | Nowcasting, Digital payments, Mobile money, RTGS |
| JEL: | C53 E37 G21 O17 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:baf:cbafwp:cbafwp26282 |
| By: | Pietro Saggese; Michael Sigmund; Burkhard Raunig; Esther Segalla; Bernhard Haslhofer; Christos Makridis |
| Abstract: | Cryptoassets are increasingly entangled with the traditional financial system, and how this activity integrates into national economies and behaves under stress bears on financial stability and the design of public digital money. However, blockchain pseudonymity and the lack of geographic identifiers force existing work to rely on indirect proxies to infer and locate market participants. Here we use a regulatory registry that directly identifies the on-chain addresses of all crypto-asset service providers (CASPs) registered in Austria, reconstructing their on-chain transaction activity across Bitcoin, Ether, USDC, and USDT through May 2025, and separating retail-like from institutionally mediated flows. We find that Austrian CASPs intermediate roughly USD 30 billion with external counterparties and are integrated globally rather than domestically. In value, this activity is dominated by a few institutional counterparties; in number, by retail-like ones. Around three major shocks, the Terra-Luna collapse, the FTX bankruptcy, and the Silicon Valley Bank failure, the two groups respond through different mechanisms, and stablecoins do not act as a uniform safe haven. The clearest case is SVB, where retail-like deposits and institutional withdrawals are consistent with USDC's two-tiered redemption mechanism. These patterns are invisible in aggregate data. Registry-based, transaction-level measurement thus offers a reproducible, cross-jurisdictional basis for monitoring how cryptoasset markets transmit risk. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.08524 |
| By: | Akcigit, Ufuk; Chhina, Raman; Cilasun, Seyit; Miranda, Javier; Serrano-Velarde, Nicolas |
| Abstract: | Beginning in January 2021, over less than two years, credit card usage by small U.S. businesses nearly doubled, interest payments rose by 60%, and delinquencies reached 2.8%. In this paper, we utilize near real-time QuickBooks data from over 1.6 million small businesses and a targeted survey to highlight the critical role that credit card financing plays in small business activity. We find, first, monthly credit card payments were up to three times higher than loan payments during this time. Second, we use targeted surveys of these small businesses to establish credit cards as a key financing source in response to firm-level shocks, such as uncertain cash flows and overdue invoices. Third, we highlight the critical role of credit cards as a key financial transmission mechanism. Following the Federal Reserve’s rate hikes in early 2022, banks cut credit card supply, leading to a 15.75% drop in balances and a 10% decline in revenue growth, as well as a 1.5% decrease in employment growth among U.S. small businesses. These higher rates also rendered interest payments unsustainable for many, contributing to half of the observed increase in delinquencies. Lastly, a simple heterogeneous firm model with a cash-in-hand constraint illustrates the significant macroeconomic impact of credit card financing on small business activity. |
| Keywords: | entrepreneurship |
| JEL: | J23 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20130 |
| By: | Yeandle, Alex; Doyle, David |
| Abstract: | Mobile money platforms are ubiquitous in many emerging economies. Hailed for raising financial inclusion and economic wellbeing, governments have now turned to mobile payments as a source of tax revenue. Transaction levies are often regressive, unpopular, and can encourage a return to cash. We present experimental evidence that they may also harm tax morale, a core component of the social contract between citizen and state. We present results from a survey experiment in Ghana, in which priming a controversial mobile transaction levy significantly lowers support for the state's right to collect taxes and willingness to comply with tax laws. We combine this with focus group discussions and analyse effect heterogeneity to examine two pre-registered explanations: transaction taxes cost citizens more than they expect to gain (reciprocity) and provoke particular backlash from non-government voters (partisanship). Our findings suggest that taxing mobile money can undermine efforts to expand fiscal capacity, while raising important mechanistic and policy questions for future research. |
| Keywords: | Africa;experiment;mobile money;public opinion;tax morale |
| JEL: | J1 E6 |
| Date: | 2026–06–24 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140135 |
| By: | Enache, Andreea; Rhodes, Andrew |
| Abstract: | We consider a setting in which a platform matches buyers and sellers, who then wish to transact with each other multiple times. The platform charges fees for hosting transactions, but also offers convenience benefits. We consider two scenarios. In one scenario, all transactions must occur on the platform; in the other scenario, buyers and sellers can disintermediate the platform after the first transaction, and do subsequent transactions offline. We find that the platform reacts to disintermediation by using a ``front-loaded'' pricing scheme, whereby it charges more for earlier transactions. We also show that sometimes the platform is better off when disintermediation is possible---because it can use disintermediation to screen users' private information about their convenience benefits. Buyers are not necessarily better off when they can disintermediate, due to the way in which the platform adjusts its fees. |
| Keywords: | Platforms |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20298 |
| By: | Greco, Giulia; Gulesci, Selim; Prabhakar, Pallavi; Sulaiman, Munshi |
| Abstract: | We present evidence from a randomized controlled trial in Uganda where married women were randomly provided unconditional cash transfers. Among treated women, we randomized the modality of payment (in cash or mobile money) and whether the beneficiary's spouse was informed about the transfer or not. We find that using mobile money for cash transfers is more effective in improving women's economic independence and decision-making power. In particular, women in the mobile money treatments have higher individual labor income and more of a say in household decisions. On the other hand, cash-based transfers are more effective in reducing intimate partner violence (IPV), especially when both partners are informed. This highlights a trade-off between improving the effectiveness of cash transfers on women's economic empowerment versus reducing IPV. While providing cash transfers digitally is more effective in improving women's control over resources, this may lower their effectiveness in addressing IPV. |
| Keywords: | Women's empowerment; Domestic violence; Cash transfers; Digital services; Privacy |
| JEL: | C93 D10 D82 J12 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20261 |
| By: | Decarolis, Francesco; Pellegrinetti, Tommaso; Rovigatti, Gabriele; Rovigatti, Michele; Shakhgildyan, Ksenia |
| Abstract: | This paper examines how proprietary algorithms used by dominant digital platforms create informational advantages in search auctions, reshaping market competition. Using experimental evidence and counterfactual simulations, we quantify the impact of algorithmic bidding on auction outcomes and competitive dynamics. Our findings reveal how platforms can leverage superior information to significantly improve their revenues, distorting competition and creating welfare losses for independent advertisers. We also show why platforms prefer selling a bidding algorithm service over directly selling data. These results highlight the need for greater scrutiny of algorithmic decision-making in platform markets, offering new insights for competition policy in digital economies. |
| Keywords: | Collusion |
| JEL: | C73 D82 D83 D18 D44 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19983 |
| By: | Benguria, Felipe; Novy, Dennis |
| Abstract: | How can a currency achieve more widespread international use? We study the internationalization of the Chinese renminbi (RMB) through the lens of a unique policy experiment in Argentina. In 2023, amid a severe dollar shortage, Argentina expanded a currency swap line with the People's Bank of China. Within the next few months, the share of imports from China invoiced in RMB surged rapidly to nearly 50% - displacing the US dollar, which had previously accounted for virtually all invoicing. Following the presidential election of late 2023, as macroeconomic policies changed and the dollar shortage eased, invoicing in RMB declined. We explore the mechanisms behind this aggregate pattern, using rich firm-level data on imports, bank-firm loan relationships, and bank balance sheets. Our results indicate that banks played a key role, in line with the dollar shortage narrative. First, firms with pre-existing relationships to banks with limited US dollar loans were more likely to switch to RMB. Second, firms borrowing from a Chinese state-owned bank were significantly more likely to use RMB. We also document firm-level spillovers, with RMB use for imports from China increasing the likelihood of RMB use for imports from other countries. Finally, we observe an effect on trade volumes. Firms switching to RMB saw increased total imports. |
| Keywords: | Banking; China; Geoeconomics; Invoicing; Renminbi; Swap; Trade |
| JEL: | E58 F14 F31 F33 G21 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20311 |
| By: | Koo, Wesley W.; Zhang, Miaomiao; Choudhury, Prithwiraj |
| Abstract: | Research Summary: Digital platforms provide arenas for global knowledge diffusion, but their underlying architecture often relies on synchronous exchange, inadvertently siloing users into distinct “time pockets” based on time zones. Using proprietary data from StackOverflow, we implement a regression discontinuity design to causally estimate that a 1-h increase (decrease) in the temporal distance between two regions leads to a 13.6% decrease (9.5% increase) in views and a 20.9% decrease (21.0% increase) in votes between those regions. These temporal frictions disproportionately penalize interactions in niche knowledge communities (e.g., sudo, slack-api) over those in popular ones (e.g., Python, JavaScript). Importantly, we show that a platform can mitigate temporal barriers by shuffling content representation. This paper contributes to our understanding of platform strategy, temporal distance, and global knowledge diffusion. Managerial Summary: While digital platforms deliver global connectivity, time zone differences create invisible barriers that stifle user interactions and knowledge exchange. Our research shows that temporal distance between regions on StackOverflow, a global knowledge community for computer programming, significantly reduces cross-region views and votes. These temporal silos disproportionately harm niche communities, where valuable content is less likely to be shared among users who are not online simultaneously. Popular communities, however, remain largely unaffected. For platform designers, relying solely on chronological feeds inadvertently fragments their global user base. To unlock cross-border exchange and support specialized communities, managers could adjust algorithms to “shuffle” content representation based on dynamic triggers rather than just the posting time. Doing so bridges temporal gaps and connects out-of-sync users. |
| Keywords: | digital platforms;global knowledge diffusion;temporal distance;user interactions |
| JEL: | J50 |
| Date: | 2026–06–29 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:140136 |
| By: | Callen, Michael; Fajardo-Steinhäuser, Miguel; Findley, Michael; Ghani, Tarek |
| Abstract: | Can digital payments systems help reduce extreme hunger? Humanitarian needs are at their highest since 1945, aid budgets are falling behind, and hunger is concentrating in fragile states where repression and aid diversion present major obstacles. In such contexts, partnering with governments is often neither feasible nor desirable, making private digital platforms a potentially useful means of delivering assistance. We experimentally evaluated digital payments to extremely poor, female-headed households in Afghanistan, as part of a partnership between community, nonprofit, and private organizations. The payments led to substantial improvements in food security and mental well-being. Despite beneficiaries' limited tech literacy, 99.75\% used the payments, and stringent checks revealed no evidence of diversion. Before seeing our results, policymakers and experts are uncertain and skeptical about digital aid, consistent with the lack of prior evidence on digital payments for humanitarian response. Delivery costs are under 7 cents per dollar, which is 10 cents per dollar less than the World Food Programme's global figure for cash-based transfers. These savings can help reduce hunger without additional resources, demonstrating how hybrid partnerships utilizing digital platform technologies can help address grand challenges in difficult contexts. |
| Keywords: | Fragility; Partnerships |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19970 |
| By: | Jakub Zwydak; Marcin W\k{a}torek; Jaros{\l}aw Kwapie\'n; Stanis{\l}aw Dro\.zd\.z |
| Abstract: | Artificial transaction generation remains an important source of potential market manipulation on cryptocurrency exchanges, as it may distort reported liquidity and reduce market transparency. This study proposes a diagnostic framework for detecting unusual trading patterns based on complexity and statistical-structure measures derived from high-frequency trade-level data. The analysis considers log-returns, trading volume, and transaction counts, using tail distributions, autocorrelation functions, multifractal characteristics, approximate entropy, and detrended cross-correlations. The methodology is applied to BTC, ETH, and XRP traded on Binance, Bitget, KuCoin, and Kraken over the period from April 1 to June 30, 2025. The results reveal a pronounced anomaly on Bitget for BTC and ETH after mid-May 2025. The number of transactions increases sharply, but there is no proportional increase in traded volume or return fluctuations. This regime is characterised by numerous low-volume trades, weaker autocorrelations, reduced multifractal organisation, higher short-pattern irregularity, and weaker cross-correlations involving the transaction-count series. These features are consistent with a noise-like component in trading activity and may indicate artificially increased transaction counts, although they do not provide direct proof of wash trading. The findings show that complexity-based indicators can be useful for detecting exchange-specific trading anomalies that remain hidden in price-based measures. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.13916 |
| By: | Francesco Crespi; Dario Guarascio; Jelena Reljic |
| Abstract: | This article reassesses the concept of technological sovereignty and its policy implications in light of the close relationships between US- and China-based digital monopolies, or Big Tech, and their respective military apparatuses. First, we empirically examine the growing influence of the private sector in R&D activities, the increasing centrality of digital technologies within sectoral and technological hierarchies, the emergence of Big Tech firms and their dominance over knowledge, infrastructures, and key technologies such as cloud computing and AI. Second, building on Coveri et al. (2025a), we analyse the mutual dependence between Big Tech and the military apparatus, showing how it reinforces the economic power of the private actors involved, weakens the state's capacity to act autonomously, and intensifies the subordination of foreign governments dependent on US and Chinese digital platforms. Third, we propose a typology of technological sovereignty that takes into account the degree of technological dependence on Big Tech, the nature of the relationship between states and digital companies, and, consequently, the state's capacity to align the activities of these companies with its own strategic objectives. |
| Keywords: | technological sovereignty, Big Tech, R&D, military apparatus |
| JEL: | F5 F52 F55 O33 O34 O38 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ter:wpaper:00209 |
| By: | Gregor Matvos; Brent Neiman |
| Abstract: | Financial sanctions are widely viewed as a powerful tool of economic statecraft, yet direct evidence on their effects remains limited. We study how sanctions affect access to global payment networks using data on correspondent banking relationships, which link banks across countries and currencies to enable cross-border transactions. We first show that the dollar and euro networks offer the broadest global connectivity, supported by a small number of key hubs in the U.S. and Europe. Sanctions that restrict access to these hubs are therefore potentially powerful. We then show how financial sanctions imposed during 2021-2025 – a period of rapid growth in sanctions – reduced targeted banks' access to major-currency networks by severing correspondent relationships. Sanctioned institutions often retained access but only through longer, indirect, and more fragile chains of intermediaries. Finally, in countries where sanctions expanded sharply, non-sanctioned banks also lost connectivity to Western networks, likely reflecting de-risking. These banks reoriented toward alternatives, particularly the Chinese yuan. Outside these heavily sanctioned economies, shifts away from the dollar and toward the yuan remain minimal on average. |
| JEL: | F3 F5 G2 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35453 |
| By: | Syed Azhar Hussain; Kashif Ahmad; Mubashir Husain Rehmani |
| Abstract: | Bitcoin (BTC) wealth distribution is often studied with macro indicators like wallet balances, prices, network activity, fees, and hashrate. This letter proposes a "Crypto-Microeconomic Observability Framework" to examine micro-level Bitcoin wealth disparities across five labeled agent classes: Service, Abuse, Malware, Individuals, and Benign. Using descriptive, inequality, and longitudinal concentration metrics, we show that Bitcoin wealth is highly concentrated across major classes, consistent with a persistent "Whale-Effect". Service entities hold the largest share of observed BTC (75.15%), while Abuse controls a disproportionately large share relative to its entity count (24.26% of BTC vs. 3.53% of entities). Individuals, Abuse, and Service show near-maximal within-class inequality (e.g., Gini = 0.9993 for Individuals), and time-series analysis indicates these patterns persist. Overall, Bitcoin wealth among labeled economic agents remains structurally uneven and concentrated in a small subset of entities. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.03646 |
| By: | Olmstead-Rumsey, Jane; Puglisi, Federico; Wu, Liangjie |
| Abstract: | Should Big Tech firms be banned from acquiring other firms? We address this question by developing a growth model with platform-based consumption. The platform supplies some products in the economy, and startups supply the rest, with the platform intermediating consumption of goods in the digital sector. Acquisitions increase the platform's product offerings and have competing effects on the entry of new startups. Theoretically, an acquisition ban reduces growth in the short run but may increase it in the long run. Calibrating the model to data on U.S. households' time use on digital platforms suggests a small welfare loss from an acquisition ban due to slower growth in both the short and long run. |
| Keywords: | Digital platforms; Endogenous growth; Mergers and acquisitions; Conglomerate mergers; Big tech; Startups |
| JEL: | E20 O41 L40 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20156 |
| By: | Inderst, Roman; Valletti, Tommaso M.; Wentzien, Christoph |
| Abstract: | A decade after the EU Interchange Fee Regulation, the central competition problem in European card payments has not disappeared. Fee caps regulate one important price component, but they do not by themselves create a credible merchant-side outside option at the point of sale. Merchants remain exposed to payment methods that are, in practice, difficult to refuse and difficult to steer away from. This Policy Letter argues that the next step in European payments policy should therefore be structural rather than merely pricebased. Building on the German experience with electronic direct debit and its migration into the SEPA direct debit framework, we propose a European right for merchants to initiate direct debit transactions from debit-card credentials. Such a right would discipline card-scheme fees, reduce dependence on non-European payment infrastructures, and strengthen contestability in European retail payments. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safepl:341990 |
| By: | Kakhbod, Ali; Kazempour, Seyed; Livdan, Dmitry; Schürhoff, Norman |
| Abstract: | The social media activity of financial influencers ("finfluencers") can propagate and amplify poor investment advice, especially if less skilled finfluencers are more active and their tweets attract more followers. Using tweet-level data from a popular stock-picking platform, we show most finfluencers are unskilled or "antiskilled, " producing negative abnormal returns, while a minority demonstrate skill. Unskilled and antiskilled finfluencers are more engaging, post excessively optimistic tweets that precede price reversals, and attract larger followings than skilled finfluencers. Consistent with a model where social media prioritizes engagement over skill, this leads to the spread of false advice and distorted belief aggregation. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20204 |
| By: | Buiter, Willem |
| Abstract: | This paper discusses six issues of interest to central banks and those interested in the technical and political economy issues associated with central banks. First, the central bank is a fiscal and financial agent of the State. Its beneficial owner should be the Treasury or Finance Ministry of the central government or, in some federations, both the central government and state or cantonal governments. The central bank’s accounts should therefore be consolidated with those of the government. The at-times bizarre formal ownership structures (the Federal Reserve System, the Swiss National Bank and the Bank of Japan are examples) should be ignored and preferably terminated and replaced with 100 percent ownership by the beneficial owner(s). Second, some central banks (including the Fed) face an asymmetric treatment of profits and losses by their beneficial owner. This should be terminated and replaced by a symmetric treatment of profits and losses or an income sharing and recapitalization agreement between the central bank and the Treasury. Third, central bank money is a liability in name only. This has important implications for the intertemporal budget constraints of the central bank and the consolidated State. Fourth, the Fiscal Theory of the Price Level is a logical fallacy. Fifth, the United States is on the way to fiscal dominance, even if the Fed remains operationally independent. The financial stability mandate of the central bank may force it to monetize unsustainable government debt and deficits on a scale that is incompatible with its price stability mandate. Sixth, it is time to eliminate the effective lower bound on nominal interest rates by abolishing fiat coin and paper currency and replacing it with an interest-bearing retail central bank digital currency that can be used in both offline and online transactions and does not have a cap on the size of its accounts or transactions. |
| Keywords: | Central bank independence; Fiscal theory of the price level; Effective lower bound on nominal interest rates; Seigniorage |
| JEL: | E50 E52 E58 E63 H63 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19947 |
| By: | Chan Kim; Peter Reinhard Hansen |
| Abstract: | Cryptocurrency markets exhibit periodic bursts in volatility and volume at one-, five-, and quarter-hour marks. Using trade data for six Binance perpetual contracts, we associate these bursts with algorithmic trading: trade-size roundness declines sharply within them, a behavioral signature of algorithmic participation. The Autocorrelation Map, a clock-phase-resolved display, reveals serial dependence in order flow and returns at the quarter-hour openings that conventional measures conceal. This opening activity is not only predictable out of sample but also informative: its order imbalance forecasts four-to-twelve-hour returns, weaker at finer marks. Our results characterize periodic algorithmic trading and its cross-frequency variation. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2607.09426 |
| By: | Wong, Wing-Keung |
| Abstract: | Employing both mean-variance portfolio optimization and stochastic dominance analysis, we examine whether including Bitcoin and a 3-month US Treasury-Bill could generate arbitrage opportunities and lead to a better investment choice. The results show, independent of whether short sales are allowed, that: (1) investors are generally indifferent to portfolios with Bitcoin and without Bitcoin; (2) investors prefer to invest in portfolios with Treasury-Bill than portfolios without Treasury Bill to gain higher expected utility but not a higher expected wealth; and (3) portfolios with both Bitcoin and a Treasury-Bill dominate the ones without Bitcoin and Treasury-Bill, at the first, second and third order. Asubperiod analysis confirms the above results, indicating that investors can earn abnormal returns when both Bitcoin and Treasury-Bills are included in the portfolio. Through robustness checks using varying portfolio sizes and excluding outliers, we confirm the consistency and reliability of our findings. Our findings can be used by investors in their investment processes, and reveal the arbitrary opportunities when Bitcoin and a 3-month US Treasury-Bill is included in the investment. |
| Keywords: | Bitcoin; Treasury bill; mean-variance portfolio optimization; stochastic dominance; arbitrage opportunities |
| JEL: | G0 |
| Date: | 2025–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:130021 |
| By: | Brandon Joel Tan |
| Abstract: | This paper studies how dollar stablecoins affect parallel foreign-exchange markets in economies with fixed or heavily managed exchange rates. When foreign currency is rationed, the true degree of exchange-rate misalignment is not directly observed. Traditional parallel markets reveal it only imperfectly because information is dispersed across bilateral and often private trading opportunities. Stablecoins make dollar-like claims easier to access outside the official allocation system, but they also create a visible, high-frequency price that aggregates order flow in a common venue. I develop a global-games model in which households observe dispersed private signals about misalignment, while stablecoin market depth determines the precision of a common public signal. Stablecoins generate a state-dependent welfare effect. They expand access to foreign-currency and can improve allocation by making beliefs about misalignment more informative, but the same public price can also coordinate runs by making beliefs and actions more synchronized. When misalignment is low, access and allocation gains dominate, so stablecoins raise welfare. When misalignment is high, the coordination externality becomes more costly: a more precise public signal compresses belief dispersion, strengthens coordinated exit incentives, and can overturn the access benefit. This points to a state-contingent approach that preserves low-cost access in normal states while using temporary, targeted measures to manage large or run-like flows when misalignment is high. |
| Keywords: | stablecoins; fixed exchange rates; parallel foreign-exchange markets |
| Date: | 2026–07–10 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/144 |
| By: | Ferrari Minesso, Massimo; Mehl, Arnaud; Triay Bagur, Olga; Vansteenkiste, Isabel |
| Abstract: | This paper, for the first time, analyzes the role of economic, technical, and geopolitical factors in interlinking of payment systems across 117 countries, using new data on fast payment links from 2016 to 2023. We test whether links are governed by standard gravity variables influencing international trade patterns, technical features or by instead—or in addition—geopolitical factors. While we find support for the role of economic factors and technical features, the most striking finding is the strength of geopolitical effects. Our estimates suggests that the reduction in the probability of payment links between geopolitically distant countries is as much as twice stronger than for geographically distant ones. Instrumental variable estimates suggest that the effect is causal. The results are in line with the hypothesis that alignment in country-preferences on sensitive features of contractual agreements along with incentives associated with higher opportunity costs of war emphasized in recent theoretical models play key roles in the establishment of interlinking arrangements. |
| JEL: | E42 F15 F30 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20105 |