Joshua Aizenman, 12 February 2019

The fall in valuation of Bitcoin has led to a debate over whether decentralised currencies can be reliably stable. This column argues that in contrast to the success of inflation-targeting regimes, there is no feasible path towards stability of a decentralised currency. The instability of cryptocurrencies is the outcome of a systemic 'tragedy of the commons' coordination failure. This is inherent in their design.

Giacomo Calzolari, Jean-Edouard Colliard, Gyöngyi Lóránth, 30 July 2016

The presence of multiple national authorities in the EU poses substantial coordination problems for the supervision of multinational banks. The Single Supervisory Mechanism aims to solve the resulting coordination failures. This column explores how banks could strategically react to the introduction of a supranational supervisor. The banking system is likely to endogenously react by reverting to an organisational form for which supranational supervision is actually less essential.

Hongda Zhong, 10 May 2016

Many assume that creditor coordination problems can only be a bad thing. In this Vox Views video, Hongda Zhong discusses the benefits of coordination problems among creditors. Such problems may create incentives for firms to pay debt back to avoid being cut out of the credit market in the future. The video was recorded in April 2016 at the First Annual Spring Symposium on Financial Economics organised by CEPR and the Brevan Howard Centre at Imperial College.

Xavier Vives, 22 December 2014

Banking has recently proven much more fragile than expected. This column argues that the Basel III regulatory response overlooks the interactions between different kinds of prudential policies, and the link between prudential policy and competition policy. Capital and liquidity requirements are partially substitutable, so an increase in one requirement should generally be accompanied by a decrease in the other. Increased competitive pressure calls for tighter solvency requirements, whereas increased disclosure requirements or the introduction of public signals may require tighter liquidity requirements.


CEPR Policy Research