Digital currencies: Policy economics
With Professor Darrell Duffie, Stanford University Graduate School of Business, June 4-8, 2022, at Swedish House of Finance
The Swedish House of Finance offers within its Doctoral Course Program in Finance a mini course
June 4 10-12 and 13-14. Overview of digital currencies and payment system innovation
June 6 10-12. The industrial organization of payment markets and fintech entry.
13-14. Student presentations.
June 7 10-12. The impact of fintech payment market entry on bank credit provision.
13-14. Student presentations.
June 8 10-11.30. Implications for currency dominance and financial sanctions.
11:30-12:00. Student presentations and course close.
To pass the course, students are expected to actively participate throughout the course and to present and submit a three-page research proposal. A presentation would consist of 5 minutes of prepared remarks and 5 minutes of discussion. If two students (at most) wish to collaborate on a proposal, they would offer 10 minutes of remarks and have 5 minutes for discussion.
Evaluation: Pass or Fail. 3.5 ECTS
Advance reading requirements:
Bank of England (2021) "New Forms of Digital Money", Discussion Paper, Bank of England, June.
D’Silva, D, Z Filková, F Packer, and S Tiwari (2019) “The design of digital financial infrastructure: Lessons from India”, BIS Paper 106.
Duarte, A, J Frost, L Gambacorta, P Koo Wilkens, and HS Shin (2022) “Central banks, the monetary system and public payment infrastructures: lessons from Brazil’s Pix”, BIS Bulletin 52, March.
Darrell Duffie, ”Payment system disruption: Digital currencies and bank-railed payment innovation”, to appear in Technology and Finance, CEPR/IESE Banking Initiative, edited by Xavier Vives.
US Department of the Treasury (2021) “President’s Working Group Report on Stablecoins”, US Department of the Treasury, Washington DC, November.
Auer, R, H Banka, N Yaa Boakye-Adjei, A Faragallah, J Frost, H Natarajan, and J Prenio (2022) “Central bank digital currencies: a new tool in the financial inclusion toolkit?”, FSI Insights on Policy Implementation Number 41, Bank for International Settlements and World Bank, April.
Bindseil, U (2022) “The case for and against CBDC – five years later”, Working paper, European Central Bank, February.
Chiu, J, M Davoodalhosseini, J Jiang, and Y Zhu (2021) “Bank Market Power and Central Bank Digital Currency: Theory and Quantitative Assessment.” Staff Working Paper 2019-20, Bank of Canada, September.
Driscoll, J, and R Judson (2013) "Sticky Deposit Rates", Federal Reserve Board, Washington DC working paper.
Duffie, D and E Economy (editors) (2022) "Digital Currencies: The US, China, and the World at a Crossroads", Hoover Press.
Federal Reserve Bank of Boston and Massachusetts Institute of Technology Digital Currency Initiative (2022) “Project Hamilton Phase 1 Executive Summary”, Federal Reserve Bank of Boston, February.
Federal Reserve Board of Governors (2022) “Money and Payments: The U.S. Dollar in the Age of Digital Transformation”, Federal Reserve Board of Governors, Washington DC, January.
G7 (2021) “Public Policy Principles for Retail Central Bank Digital Currencies”, Bank of England, London, July.
Rochet, J-C, and J Tirole (2003) “Platform Competition in Two-sided Markets”, Journal of the European Economic Association, Volume 1, pages 990-1029.
Sveriges Riksbank (2022) "E-Krona Pilot: Phase 2", Sveriges Riksbank, Stockholm, April.
The White House (2022) “Executive Order on Ensuring Responsible Development of Digital Assets”, The White House, Washington DC, March.
Whited, T, Y Wu, and K Xiao (2022) “Central Bank Digital Currency and Banks,” Working paper to appear, University of Rochester.
Zamil, R, and A Lawson (2022) “Gatekeeping the gatekeepers: when big techs and fintechs own banks– benefits, risks and policy options”, Financial Stability Institute, Bank for International Settlements, January.