Search Results
Working Paper
Stablecoins: Growth Potential and Impact on Banking
Stablecoins have experienced tremendous growth in the past year, serving as a possible breakthrough innovation in the future of payments. In this paper, we discuss the current use cases and growth opportunities of stablecoins, and we analyze the potential for stablecoins to broadly impact the banking system. The impact of stablecoin adoption on traditional banking and credit provision can vary depending on the sources of inflow and the composition of stablecoin reserves. Among the various scenarios, a two-tiered banking system can both support stablecoin issuance and maintain traditional ...
Working Paper
Global Demand for Basket-Backed Stablecoins
We develop a model where persistent trade shocks create demand for a basket- backed stablecoin, such as Mark Carney's "synthetic hegemonic currency" or Facebook's recent proposal for Libra. In numerical simulations, we find four main results. First, because of general equilibrium effects of the basket currency on the volatility of currency values, overall demand for that currency is small. Second, despite scant holdings of the basket, its global reach may contribute to substantial increases in welfare if the basket is widely accepted, allowing it to complement holdings of sovereign ...
Speech
Considerations on the Road Ahead for Monetary Policy Implementation
Remarks at the New York Fed and Columbia SIPA Monetary Policy Implementation Workshop, New York City.
Working Paper
Beyond the Doomsday Economics of “Proof-of-Work” in Cryptocurrencies
This paper discusses the economics of how Bitcoin achieves data immutability, and thus payment finality, via costly computations, i.e., ?proof-of-work.? Further, it explores what the future might hold for cryptocurrencies modelled on this type of consensus algorithm. The conclusions are, first, that Bitcoin counterfeiting via ?double-spending? attacks is inherently profitable, making payment finality based on proof-of-work extremely expensive. Second, the transaction market cannot generate an adequate level of ?mining? income via fees as users free-ride on the fees of other transactions in a ...
Working Paper
Defining Households That Are Underserved in Digital Payment Services
U.S. households that lack digital means of making and receiving payments cannot participate fully in an increasingly digitized economy. Assessing the scope of this problem and addressing it requires a definition of households that are underserved in digital payments. Traditional definitions of households underserved in the banking system—those that are unbanked and those that are underbanked—are not suitable because they do not account for the ownership of nonbank transaction accounts that can be used to make and receive digital payments. In this paper, we define households underserved in ...
Speech
U.S. Regulations and Approaches to Cryptocurrencies
Remarks at the BIS Central Bank Legal Experts’ Meeting, Basel, Switzerland
Briefing
Motives Matter: Examining Potential Tension in Central Bank Digital Currency Designs
As a new central bank liability, central bank digital currency (CBDC) has the potential to address various issues within current payments and financial systems. The motivation behind a CBDC will determine how it is designed; a CBDC designed to achieve one goal, such as broader financial inclusion, may have difficulty achieving other objectives.
Faster Payments, More Disruptions
New payment technologies have transformed the banking system by increasing the efficiency and mechanisms to transfer funds. How will these innovations disrupt the banking system?
Briefing
Déjà Vu All Over Again: What the Return of Private Currencies Could Mean for Central Banks
Private digital currencies, or “crypto-assets,” have surged in popularity recently, but they are not new to the payments landscape and may present familiar challenges for central banks. Although they have yet to fulfill the main functions of money, crypto-assets still have the potential to affect financial stability and the implementation of monetary policy.