Jonathan Chiu is a Senior Research Advisor in the Banking and Payments Department (BAP). His main research interests concern monetary theory, banking, payments and financial infrastructures. He also teaches monetary theory at Queen’s University. Jonathan received his PhD in economics from the University of Western Ontario.
DeFi lending with proper governance is operationally viable, but it also faces constraints related to capital efficiency, liquidation risk, and systemic fragility within the crypto ecosystem.
Central bankers argue that programmable digital currencies may compromise the uniformity of money. We develop a stylized model to examine this argument and the trade-offs involved in circulating programmable money.
This paper explores the implications of introducing digital public and private monies (e.g. tokenized central bank digital currency [CBDC] or tokenized deposits) for stablecoins and illicit crypto transactions.
We develop a production-network model to capture how decentralized finance (DeFi) has evolved across different sectors of financial services. The model allows us to measure the value added by different DeFi sectors and to study how the connections across the sectors influence token prices.
We develop a dynamic model to capture key features of decentralized finance lending. We identify a price-liquidity feedback: the market outcome in any given period depends on agents' expectations about lending activities in future periods, with higher future price expectations leading to more lending and higher prices in that period.
Central banks play a pivotal role in well-functioning payments systems by providing liquidity via collateralized lending. This article discusses the role of collateral and haircut policy in central bank lending, as well as the distinguishing features of the central bank’s policy relative to private sector practices. It presents a model that explicitly incorporates the unique role of central banks in the payments system and argues that central banks must consider how their haircut policies affect the relative price and liquidity of assets, the market’s asset allocation, and the likelihood of participants to default. Furthermore, under extraordinary circumstances, there is a rationale for the central bank to temporarily reduce haircuts or broaden the list of eligible collateral to mitigate the shortage of liquidity in the market.
“A Model of Tiered Settlement” (with James Chapman and Miguel Molico) in Journal of Money, Credit and Banking, Volume 45, Issue 2-3, pages 327–347, March-April 2013.
“Central Bank Haircut Policy” (with James Chapman and Miguel Molico) in Annals of Finance, Volume 7(3), p. 319-348, August 2011.
“Incentive Compatibility on the Blockchain” (with Thorsten Koeppl) in W. Trockel and L. Hurwicz (Eds) Social design : essays in memory of Leonid Hurwicz. Cham: Springer, 2019.
Research
“The Economics of Cryptocurrencies – Bitcoin and Beyond” (with Thorsten Koeppl).
“Short-run Dynamics in a Search-Theoretic Model of Monetary Exchange” (with Miguel Molico).
