Financial markets

Antonio Fatás, Beatrice Weder di Mauro, 26 March 2019

We should not expect a high correlation between ICO tokens and the price of Bitcoin or Ethereum given that they have very different business cases. This column demonstrates that this was indeed the case during 2007, but the moment the Bitcoin/Ethereum bubble burst, the correlation with ICOs increased and it remained high even when prices had stabilised. This may have been because the ICO market is still in its infancy and needs to mature, or it may indicate that ICOs were just one of the children of the hype and are likely to share the fate of major cryptocurrencies.

Marlene Amstad, 21 March 2019

Two events have shaped the financial system over the past ten years: the Global Crisis and the rise of fintech. But while the lessons learned after the crisis have been widely discussed and the regulatory response broadly agreed upon, the question of whether and how to regulate fintech is a topic of an ongoing policy debate. This column discusses the three basic options that regulators have: ignore it, ‘duck type’ rules into existing regulations, or specifically tailor new regulations.

Emmanuel Farhi, Francois Gourio, 10 March 2019

Most developed economies have experienced large declines in risk-free interest rates and lacklustre investment over the past 30 years, while the profitability of private capital has increased slightly. Using an extension of the neoclassical growth model, this column identifies what accounts for these developments. It finds that rising market power, rising unmeasured intangibles, and rising risk premia play a crucial role, over and above the traditional culprits of increasing savings supply and technological growth slowdown.

Natasha Kalara, Lu Zhang, Karen van der Wiel, 09 March 2019

The Global Crisis has profoundly changed the financial landscape, including firm financing. This column examines the development of various channels of firm financing before and after the crisis among four groups of EU countries, the US, and Japan. While bank finance and, to some extent, equity finance are under pressure, alternative finance, although small, seems to be on the rise.

Raphael Auer, 08 March 2019

Bitcoin and related cryptocurrencies are exchanged via simple technical protocols for communication between participants, as well as a publicly shared ledger of transactions known as a blockchain. This column discusses research on how cryptocurrencies verify that payments are final, that is, that they are irreversible once written into the blockchain. It points to the high costs of achieving such finality via ‘proof-of-work’ and to a crucial externality in the transaction market, and argues that with the current technology, the liquidity of cryptocurrencies is set to shrink dramatically in the years to come.

Other Recent Articles:

Events

CEPR Policy Research