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on Payment Systems and Financial Technology |
| By: | Keith Hazen |
| Abstract: | Using transaction-level data for Bitcoin (BTC), Ethereum (ETH), and Wrapped Bitcoin (WBTC) matched to public “Whale Alert” signals, we examine how large-scale cryptocurrency trades shape market microstructure. Specifically, we test whether whale transactions alter the composition of active non-whale participants, trigger leader-follower herd behavior, and elevate short-term return volatility. We document a stark divergence between networks: Whale alerts heavily reshape (native) BTC participation by mobilizing previously inactive retail and institutional investors, whereas ETH and WBTC participant profiles remain highly stable on the Ethereum platform. Furthermore, non-whale investors exhibit strong leader-follower behavior in the BTC market — buying and selling in tandem with whale direction. This pattern is largely absent in the Ethereum ecosystem, except among the largest non-whale tranches. These behavioral dynamics directly mirror market stability: Whale alerts induce a brief 24-hour spike in BTC volatility (most acutely following WBTC alerts) but coincide with compressed volatility on the Ethereum platform. Additionally, these asymmetric market responses persisted across Ethereum’s transition from proof-of-work to proof-of-stake. These findings indicate persistent informational and structural asymmetries between large and small digital-asset investors. |
| Keywords: | Cryptocurrency; Ethereum; ETH; Bitcoin; WBTC; crypto whales; DeFi |
| JEL: | G14 G23 G28 G41 |
| Date: | 2026–09–04 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedpwp:103741 |
| By: | Pablo D. Azar; Maryam Farboodi; Nish Sinha |
| Abstract: | We study how stablecoins impact global capital flows by constructing a novel wallet-level dataset linking geotagged Ethereum Name Service registrations to stablecoin transactions around banking restrictions, currency crises, sanctions, and monetary disruptions. We find that crisis-country wallets experience significant increases in USD stablecoin inflows and receipt activity during crisis weeks. Motivated by this evidence, we develop a small-open-economy New Keynesian model in which household adoption of programmable stablecoins weakens the government’s enforcement technology for capital controls by making capital mobility endogenous. The empirical evidence validates the model’s central assumption that flight pressure increases stablecoin adoption. Stablecoins therefore tighten the Mundell–Fleming trilemma by reducing the government’s ability to sustain independent monetary policy under a fixed exchange-rate regime. |
| Keywords: | Mundell–Fleming trilemma; capital controls; blockchain; stablecoins; financial infrastructure |
| JEL: | F32 F33 F38 E58 G28 |
| Date: | 2026–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:103702 |
| By: | Ylva Baeckström; Akanksha Jalan (Rennes SB - Rennes School of Business); Roman Matkovskyy (Rennes SB - Rennes School of Business) |
| Abstract: | While the volatile and unregulated cryptocurrency market is growing rapidly, little is known about what drives individual investor motivation to participate. This study investigates how trust, a proven predictor for stock market participation, is linked to cryptocurrency participation among 1, 519 individual investors in Denmark, Finland and Sweden, countries characterised by high levels of digital adoption, trust and stock market participation. Our results show that individuals who trust strangers in relation to financial matters are more prevalent cryptocurrency participants, both in terms of current holdings and intended future holdings, compared to less trusting individuals. Furthermore, trust reduces how risky individuals consider cryptocurrencies to be and cryptocurrency knowledge raises people's risk tolerance. Both trust and knowledge, therefore, contribute to increased cryptocurrency participation. Our study contributes to the debate about the mitigating role of trust for household investment decision making, extending its scope to the novel cryptocurrency market. This research is relevant for actors in the cryptocurrency market including developers, service providers, investors, and financial market regulators. |
| Keywords: | Financial knowledge JEL classifications G11, Risk taking, Trust, Investment decision making, Cryptocurrencies |
| Date: | 2025–11–06 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05725456 |
| By: | Fairbanks, Jackson |
| Abstract: | Perpetual preferred equity issued against a Bitcoin reserve produces a forward-coverage problem. The measure of forward solvency is the Bitcoin Coverage Ratio (BCR): BTC reserve value over annual dividend obligation, in years of forward coverage. BCR collapses the preferred-to-reserve ratio and dividend rate into a single coverage statistic. Primary failure occurs at BCR |
| Keywords: | Bitcoin Coverage Ratio (BCR), Perpetual Preferred Equity, Digital Credit, Bitcoin Treasury, Bitcoin, Credit Risk, Solvency, Coverage Ratio, Drawdown, Backtesting |
| JEL: | G01 G23 G32 G33 |
| Date: | 2026–07–29 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:130390 |
| By: | Rosie Levy; Srini Ramaswamy |
| Abstract: | Development of faster payment infrastructure has accelerated in recent years. Real-time payment options for individuals and businesses have grown substantially, including the Federal Reserve's FedNow platform allowing instant payment processing for eligible banks and credit unions. |
| Date: | 2026–08–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:d00001:103709 |
| By: | Murillo Campello; Angela Gallo; Lira Mota; Tammaro Terracciano |
| Abstract: | We study the demand for safety and liquidity in the crypto ecosystem. We do so under a framework in which a representative investor allocates liquidity across stablecoin deposits in lending pools and traditional safe assets (e.g., MMF shares). Our model delivers three main predictions: (i) the stablecoin deposit premium co-moves with the Treasury premium when investors value the safety and liquidity services of stablecoins; (ii) increases in Treasury supply reduce the stablecoin deposit premium; and (iii) drops in the perceived safety and liquidity of stablecoin deposits (e.g., due to de-pegs or hacker attacks) reduce their premium. Using granular data from hundreds of DeFi pools spanning multiple protocols, tokens, and blockchains, we find evidence supporting these predictions. Investors treat stablecoin deposits as money-like instruments that are borderless and permissionless, yet as fragile as other forms of privately produced safe assets. |
| JEL: | E41 F33 G1 G2 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35557 |
| By: | Maysam Rabbani; Ram Sewak Dubey |
| Abstract: | Hybrid platforms disadvantage third-party sellers through the platform fee and self-preferencing, and regulators have worried that constraining either instrument may intensify the other. We model a platform that chooses both instruments and find the opposite: single-instrument regulation is effective because the instruments are strategic complements, and regulating either instrument curbs the other. We also find that the two instruments achieve what monopolization achieves, higher prices and reduced consumer welfare, while passing every conventional antitrust test. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.02800 |
| By: | Panagiotis Mavridis; Anargyros Baklezos; Christos Nikolopoulos |
| Abstract: | This paper analyzes the implementation of blockchain-based integrity mechanisms in Greek Fiscal Electronic Mechanisms (FEMs) and the central tax information system eSEND. The study examines the cryptographic architecture of fiscal devices, including Electronic Cash Registers, Fiscal Printers, Fiscal Signing Machines, and FEMAS devices, which implement double or triple hash-chain structures to ensure transaction immutability. The transmission protocol between fiscal devices and the central database is also evaluated with respect to encryption, sequential validation, and blockchain verification. In contrast, the architecture of Electronic Invoicing Provider Services and the myDATA central platform is analyzed, highlighting the absence of blockchain-based integrity guarantees. The comparison demonstrates that hardware-based fiscal mechanisms provide stronger guarantees for transaction completeness and tamper resistance than purely software-based invoicing infrastructures. The findings highlight architectural weaknesses in the current e-invoicing framework and propose improvements for ensuring transaction integrity in digital tax ecosystems. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.04356 |
| By: | Freddy Cepeda-Lopez; Fredy Gamboa; Javier Miguelez-Márquez |
| Abstract: | This paper analyzes the intraday timing of transactions in Colombia's large-value payment system (CUD) from 2018 to 2025, focusing on how changes in reserve requirements affect liquidity management by financial institutions. Using high-frequency transaction data, we document that reductions in reserve requirements in April 2020 and September 2024 are associated with a shift of settlement activity toward later hours of the day. The effects are heterogeneous, as smaller institutions remain more dependent on marginal liquidity and incoming payments in an interdependent payment network. We also find that the launch of the new Central Securities Depository (DCV) system in April 2024, along with changes in payment volume and value, further reinforces the move toward later settlements. Greater reliance on intraday repos relative to reserves has also reduced early-day activity while improving liquidity management later in the business day. |
| Keywords: | Payment clearing and settlement systems, intraday liquidity management, reserve requirements |
| JEL: | C5 E42 E58 G20 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1373 |
| By: | Irene Aldridge |
| Abstract: | Existing decentralization measures are almost entirely origination-side, quantifying concentration in who mines or validates blocks. We introduce a spectral methodology measuring concentration on the destination side instead: where value ultimately flows once it leaves a validator wallet. Modeling wallet-to-wallet transfers as a Markov chain, we compute near-real-time steady-state probabilities via the Perron--Frobenius theorem to identify long-run terminal recipients. Applied to 76, 855 Ethereum wallets from four years of mining data, fund flows collapse to just four terminal accounts. None of these fund destination accounts are among the network's three dominant identifiable revenue-earning miners. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.23577 |
| By: | Martin Summer (Oesterreichische Nationalbank, Economic Studies Division) |
| Abstract: | Would widely adopted stablecoins affect the price level, and through which channels? We analyse this question in the monetary general-equilibrium framework of Dubey and Geanakoplos, in which payment capacity—money, bank credit and the spendable share of government bonds—determines nominal outcomes. Stablecoins backed by government debt open a channel of inflationary finance: the existing bond stock becomes spendable (a stock effect) and newly issued debt arrives spendable (a flow effect), with the price level rising in the payment capacity so created and in the breadth of adoption. Monetary policy can offset the rise, but only at the cost of suppressing the trade that bank credit finances. Beyond these bounded effects, current regulatory design does not close an escalation path on which stablecoins become a competing outside money, putting nominal determinacy at risk. Whether these effects materialise is largely a policy choice: they require adoption in ordinary payments, which regulation currently shapes. |
| Keywords: | stablecoins, inflation, public and private money, monetary architecture |
| JEL: | E31 E42 D52 E44 G21 G28 |
| Date: | 2026–09–03 |
| URL: | https://d.repec.org/n?u=RePEc:onb:oenbwp:280 |
| By: | Andres, Raphaela; Elsas-Nicolle, Ambre; Rossi, Michelangelo; Tremblay, Mark J. |
| Abstract: | Digital platforms govern not only how ecosystem value is created, but also how complementors capture it. In this paper, we study how content creators respond when a dominant platform restricts monetization while remaining essential for audience discovery. Our setting is YouTube's revision of its monetization regime, implemented in the aftermath of the 2017 advertiser boycott known as the "Adpocalypse". Under the new regime, YouTube tightened content moderation and monetization rules, reducing the level and predictability of creators' advertising revenues. Creators could partially bypass YouTube's monetization layer through Patreon, a membership platform enabling recurring direct payments from users. Using monthly panel data on approximately 8, 400 video creators active on Patreon between August 2017 and August 2018, we compare creators with a pre-shock YouTube link to creators without an observed link in a matched difference-in-differences design. Following the policy change, exposed creators increased their production of member-only Patreon content without reducing freely accessible posts. They also accumulated paying patrons and recurring membership revenue at a significantly faster monthly rate, with a differential increase of approximately 9%. The increase in paid content was strongest among creators whose content faced greater pre-existing monetization risk. The findings suggest that platform governance can reallocate complementor effort and value capture across platforms: creators can shift monetization toward an auxiliary channel while continuing to rely on the dominant platform for audience discovery. |
| Keywords: | Platform governance, Complementors, Platform bypassing, Creator economy, Monetization |
| JEL: | L10 L22 L82 L86 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:343111 |
| By: | Seiya Hirano |
| Abstract: | Two-sided markets exhibiting network effects often face coordination problems, which may lead to an inefficient outcome where a lower-quality platform wins the market. Some users make collective decisions as a group, potentially affecting the choices of others. This paper analyzes the impact of group users on two-sided platform competition. We develop a model with two platforms: one with a quality advantage (the higher-quality platform) and the other with a network advantage due to its focality (the lowerquality platform), meaning that users expect others to join it when multiple equilibria exist. There are two types of users: individual users and group users. An individual user makes decisions independently, whereas group users make collective choices that can affect others’ decisions. Our main findings are as follows: First, the group affects individual users’ choices if its size is sufficiently large, meaning it is pivotal. However, even if the group is pivotal, it may join the lower-quality platform unless it is large enough. The group joins the higher-quality platform only when it is both pivotal and sufficiently large. Second, we examine how the group size affects surplus distribution. Increasing group size improves market efficiency but exacerbates the disparity in the surplus between the group users and individual users. Our results highlight the dual role of group users in platform competition: while they can enhance efficiency by steering the market toward the higher-quality platform, they may also contribute to imbalances in surplus distribution. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1320 |
| By: | Zhengyang Jiang |
| Abstract: | Does financial opening necessarily lead to currency internationalization? To study the competition between incumbent and rising powers under financial interdependence, we develop a model of asset demand with microfounded network effects. Search frictions with currency-specialized intermediaries generate distinct notions of liquidity at asset-market and currency-area levels, which jointly shape the trajectory of currency competition. In the U.S.-China context, China at early stages of financial development benefits from pooling its assets with the dollar area, which reinforces the status quo. As China's financial markets deepen, RMB issuance allows China to internalize network effects and erode the dollar's dominance, triggering a discrete shift toward fragmentation. This transition is further shaped by sanctions, financial repression, and third-country responses, highlighting how financial interdependence transforms cooperation into rivalry in the evolution of the international financial order. |
| JEL: | E42 F34 G15 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35541 |
| By: | Sophie Mignon (MRM-ORGA - Montpellier Research in Management - Organisations - MRM - Montpellier Research in Management - UPVD - Université de Perpignan Via Domitia - UM - Université de Montpellier); George Aboueldahab (EDC - EDC Paris Business School); Magali Aubert (UMR MoISA - Montpellier Interdisciplinary center on Sustainable Agri-food systems (Social and nutritional sciences) - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Ysé Commandré (UTTOP - Université de Technologie Tarbes Occitanie Pyrénées - Comue de Toulouse - Communauté d'universités et établissements de Toulouse); Micheline Mazawan Coulibaly (UMR MoISA - Montpellier Interdisciplinary center on Sustainable Agri-food systems (Social and nutritional sciences) - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement, UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12); Romane Guillot-Pelliet (AGIR - AGroécologie, Innovations, teRritoires - Toulouse INP - Institut National Polytechnique (Toulouse) - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - EI Purpan - Ecole d'Ingénieurs de Purpan - Comue de Toulouse - Communauté d'universités et établissements de Toulouse); Anne Mione (MRM-ORGA - Montpellier Research in Management - Organisations - MRM - Montpellier Research in Management - UPVD - Université de Perpignan Via Domitia - UM - Université de Montpellier); Florent Saucède (UMR MoISA - Montpellier Interdisciplinary center on Sustainable Agri-food systems (Social and nutritional sciences) - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Jan Smolinski (Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement, UMR MoISA - Montpellier Interdisciplinary center on Sustainable Agri-food systems (Social and nutritional sciences) - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement) |
| Abstract: | In an environment where markets are shaped by political dynamics and controversies described as 'ordinary consequences' (Geiger et al., 2014), there is a growing propensity to resort to digital tools, which are frequently imbued with 'technological solutionism' (Vigouroux-Zugasti, 2018). The advent of digital technologies generates promises regarding their ability to contribute to the improvement of a variety of economic sectors, including agriculture and food. These tools are often presented as powerful vectors for empowerment, transparency, and disintermediation (Jouanjean, 2019). From simple matchmaking to the complex management of Big Data or secure transactions, the expectations placed upon these techno logies are manifold and diverse. However, concrete experience reveals a reality that is often more nuanced, if not contrasted, where initial promises collide with technical, social, economic and governance challenges (Pandey et al., 2022). This chapter proposes to explore this tension between the expectations raised by digital tools as intermediation instruments in the agricultural and food sectors and the realities observed through several studies funded or labelled by #DigitAg, alongside an analysis of recent literature. Digitalising intermediation in agriculture: which tools? which challenges?The toolsThe agricultural and food sectors have witnessed the emergence of a diversity of digital tools aimed at facilitating the ways in which actors exchange and coordinate. The #DigitAg social science PhD research projects mentioned in this chapter primarily focused on three tools: digital platforms, data platforms and blockchain technology.Digital platforms create interfaces that facilitate interactions between different types of actors (Chen et al., 2022). While food platforms organise transactions between farmers and their clients (Chiffoleau et al., 2018), data platforms concentrate their solutions |
| Abstract: | Chapter 7 of 2nd part of the book: Processes, practices, and instruments: understanding the multiple dimensions of agricultural digitalisation |
| Date: | 2026–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05732547 |
| By: | Hui Gong; Michail Samawi; Francesca Medda |
| Abstract: | AI agents can select tools, counterparties, and transaction parameters, yet inference should not itself confer authority to execute a financial action. This study develops and evaluates Authority-Inference Separation (AIS), an intent-centered architecture for bounded agentic finance. AIS treats a financial action intent as the control object: a machine-generated proposal can receive temporary executable authority only after an independent deterministic control plane validates registered agent identity, accountable ownership, mandate and risk-appetite lineage, policy version, state, approvals, and exact economic semantics. Blockchain can then enforce the operational representation of granted authority and record portable settlement evidence, while institutional legitimacy, service delivery, accounting classification, and human accountability remain off-chain obligations. Evaluation combines four-domain instantiation, official BIS and MAS cases, a 48-fixture executable prototype, and a public-ledger observability test. Across 36 synthetic authorization attacks, a direct-agent baseline accepted 36 attack effects, a prompt-policy baseline accepted 20, and AIS accepted none; all three accepted 8/8 admissible fixtures. AIS also rejected 4/4 token replays and 8/8 recipient or rail substitutions, withheld completion in 4/4 service-delivery failures, and populated all 13 defined evidence fields. A test of 1, 700 recent Base transactions associated with public x402 facilitator addresses shows that public ledgers can evidence settlement and selected authorization parameters but cannot establish institutional mandate, legal accountability, service delivery, or accounting treatment. AIS and blockchain are therefore complementary: AIS decides whether a specific intent may act, while blockchain can make granted authority bounded, executable, and independently observable. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.30519 |
| By: | Tetsuya Takaishi |
| Abstract: | Herein, we propose a quantum circuit learning framework for modeling the realized volatility (RV) of Bitcoin and investigate the statistical properties of the predicted time series through multifractal analysis. Unlike conventional GARCH-type models, which require a pre-specified functional form for the volatility process, a parameterized quantum circuit directly approximates the volatility function from empirical data, eliminating the need for explicit model selection. Using five-minute Bitcoin price data, we construct daily RV, train a single-qubit parameterized quantum circuit, and generate a long synthetic time series from the optimized quantum circuit. Multifractal Detrended Fluctuation Analysis is applied to calculate the generalized Hurst exponent $h(q)$, the singularity spectrum $f(\alpha)$, and the multifractal scaling exponent $\tau(q)$. The predicted return series exhibits $h(2)\approx 0.5$, consistent with near-random dynamics, and both the predicted and the empirical return series display multifractality that partially persists after random shuffling. The increment series of RV shows pronounced anti-persistence with $h(2)\approx 0.05$--$0.1$, consistent with the rough volatility hypothesis. These results demonstrate that a simple single-qubit parameterized quantum circuit captures qualitatively some observed properties in Bitcoin volatility dynamics. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.04569 |
| By: | Zachary Feinstein; Ionut Florescu; Sean O'Leary |
| Abstract: | Automated market makers (AMMs) are typically interpreted and evaluated as decentralized exchanges. Herein, we take the perspective envisioned by Balancer that an AMM can also be viewed as a portfolio technology that programmatically enforces an economic mandate. In particular, we follow the geometric mean market maker (G3M) invariant employed by that protocol in order to enforce a target-weighted portfolio. We introduce a multi-asset fee structure to the G3M under which competitive arbitrage implements a band-rebalancing strategy with mis-weighting bounded ex ante, allowing compliance with the mandate to be verified directly from the pool's observable holdings. We then compare simulated G3M portfolios against the realized performance of VBIAX, EQL, and EDOW on annualized returns and tracking error against the portfolio mandate. Across these historical case studies, and using arbitrage-only order flow, the G3M is found to outperform the incumbent funds in both metrics for certain fee ranges. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.02917 |
| By: | Alvaro Contreras (Boston University); Peter Eccles (Financial Conduct Authority); Paolo Siciliani (Bank of England) |
| Abstract: | Cloud outsourcing may alter competition in banking by allowing smaller competitors to access scalable digital infrastructure. This paper studies the effects of banks’ outsourcing agreements with Cloud Service Providers (CSPs) in the UK banking sector using proprietary bank-provider contract data. We find that CSP spending is associated with lower operating costs and higher deposits, with reduced-form effects concentrated among large institutions. We also find that increases in capital requirements are associated with higher CSP spending, consistent with large institutions using CSP adoption to reduce dependence on legacy IT systems, improve operational efficiency, and strengthen long-term franchise value. We then estimate a structural model of competition in the UK deposit market to quantify depositor-demand effects from CSPs. We find that the demand-side benefits of CSP adoption are substantially larger for small and medium banks and building societies. We use the model to conduct two counterfactual analyses. First, we simulate a scenario in which cloud outsourcing was restricted prior to its widespread adoption. The counterfactual implies higher market concentration, lower market shares for smaller institutions, and lower depositor welfare. Second, we analyse a reduction in capital requirements. While lower capital requirements directly increase welfare through funding-cost effects, they also reduce incentives to invest in CSP adoption, offsetting roughly 32% of the direct welfare gain. Our findings suggest that cloud outsourcing has partly reduced technological barriers to competition in banking markets. |
| Keywords: | Cloud outsourcing;bank competition;process innovation;financial regulation |
| JEL: | G21 G28 O31 D22 |
| Date: | 2026–08–14 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023540 |
| By: | Kevin M. Warsh |
| Date: | 2026–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgsq:103707 |
| By: | Linsen Zhu; Mengqing Cai |
| Abstract: | Artificial intelligence (AI) now supports investment workflows from data and prediction through research, portfolios, execution, and tool use. Technical capability, however, is not evidence of investment profitability. This critical state-of-the-art review examines public research available through 31 August 2026 on listed equities, exchange-traded funds, centralized crypto spot, perpetual futures, and on-chain markets. We organize evidence with an alpha-translation chain: point-in-time information must yield a stable signal, feasible positions, executable orders, and risk-adjusted returns after costs. Across machine learning, time-series foundation models, financial language models, reinforcement learning, and agents, the examined record shows real but mainly upstream progress in prediction, text processing, portfolio design, and workflow integration. Evidence is thinner for durable net performance. Temporal contamination, repeated selection, survivorship, weak benchmarks, implementation costs, venue mechanics, and capacity can break translation to net alpha. Strong historical results coexist with predictor decay, corrected look-ahead failures, mixed prospective evidence, and few audited live-capital records. Crypto adds informative state but requires separate treatment of spot, perpetual, and decentralized cash flows and execution. Within the public evidence examined here, no general AI architecture is shown to deliver persistent, cross-regime, capacity-aware net alpha. More credible claims require point-in-time data and models, decision-aligned objectives, joint portfolio--execution evaluation, controlled adaptation, prospective tests, and authority-matched governance. These conditions can improve evidence and implementation; they do not guarantee profit. |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2609.04917 |
| By: | Bastien Baude; Vincent Danos; Hamza El Khalloufi |
| Abstract: | This work complements our previous paper, which studies borrower-side strategies in decentralized lending markets, by focusing on lender-side capital allocation. We consider a lender who seeks to allocate a fixed budget across multiple markets sharing the same supplied asset. Accounting for the impact of supplied capital on lending rates, we derive closed-form solutions under three interest-rate models: linear, kinked, and adaptive (Morpho's AdaptiveCurveIRM). Backtests are conducted first on USDC and then on WETH Morpho lending markets on Ethereum. We also show that, under the kinked rate model, an allocation that brings a market exactly to the kink is never optimal on the lender side, whereas it can be optimal on the borrower side. This asymmetry may create tension between lenders and borrowers around the kink and thereby exacerbate rate volatility. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.24206 |
| By: | Abdellah Belbouli (Sultan Moulay Slimane University, Higher School of Technology, Biology, Khenifra, Morocco); Salma Senhaj (Sultan Moulay Slimane University, Higher School of Technology, Biology, Khenifra, Morocco); Fatima Touhami (Sultan Moulay Slimane University, Higher School of Technology, Biology, Khenifra, Morocco); Gilbert Alan Okouanga Pira (Sultan Moulay Slimane University, Higher School of Technology, Biology, Khenifra, Morocco); Abdelati Zouine (Sultan Moulay Slimane University, Higher School of Technology, Biology, Khenifra, Morocco); Ahmed Bahbah (Sultan Moulay Slimane University, Higher School of Technology, Biology, Khenifra, Morocco) |
| Abstract: | This paper examines whether changes in cash in circulation contain predictive content for inflation in Morocco, and whether inflation itself feeds back into cash demand, during a period marked by major shocks (2017M01-2023M09). Using monthly data from official sources on currency outside banks, the consumer price index (CPI), the policy rate, and international oil prices, we estimate an Autoregressive Distributed Lag model in its Unconstrained Error-Correction (ARDL-UECM) form, which accommodates mixed integration orders and separates short-run dynamics from long-run adjustment. Lag orders are selected by the Akaike Information Criterion, and inference is based on HAC (Newey-West) standard errors. Bounds testing indicates a stable long-run relationship in the inflation equation once monetary policy and oil prices are controlled for. Short-run cash dynamics are jointly significant in the inflation equation, implying that cash growth contains incremental information for near-term price changes. At the coefficient level, a one-percentage point increase in monthly cash growth is associated with roughly 0.08 percentage points higher monthly inflation, with the lagged cash effect statistically strongest. In the reverse direction, the cash equation does not support a long-run equilibrium relationship within the same conditioning set, but it shows very strong short-run feedback from inflation to cash growth, consistent with higher prices raising nominal transaction needs. Overall, the evidence is most consistent with bidirectional short-run interactions, with particularly strong feedback from inflation to cash, while cash remains a useful auxiliary indicator for inflation when interpreted alongside policy-rate movements and imported cost pressures. These results suggest that monitoring cash growth can add value to inflation assessment in Morocco, especially in contexts where precautionary hoarding and informal cash-intensive activity may amplify the link between nominal spending needs and currency demand; however, conclusions on the exchange-rate channel remain limited by data availability at a consistent monthly frequency. |
| Keywords: | money demand, ARDL-UECM modeling, imported cost pressures, informal sector channel, monetary aggregation dynamics |
| Date: | 2026–06–15 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05715333 |