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We consider the debut of a new monetary instrument, central bank digital currencies (CBDCs). Drawing on examples from monetary history, we argue that a successful monetary transformation must combine microeconomic efficiency with macroeconomic credibility. A paradoxical feature of these transformations is that success in the micro dimension can encourage macro failure. Overcoming this paradox may require politically uncomfortable compromises. We propose that such compromises will be necessary for the success of CBDCs. JEL classification: E42, E58, N10 Key words: monetary systems, banknotes, central banks, digital currencies, Every year a new cohort of economists begins their professional careers with a trip into a fantasy land, one more unlikely than anything Walt Disney ever imagined. In this make-believe [...]

We consider the debut of a new monetary instrument, central bank digital currencies (CBDCs). Drawing on examples from monetary history, we argue that a successful monetary transformation must combine microeconomic efficiency with macroeconomic credibility. A paradoxical feature of these transformations is that success in the micro dimension can encourage macro failure. Overcoming this paradox may require politically uncomfortable compromises. We propose that such compromises will be necessary for the success of CBDCs. [ABSTRACT FROM AUTHOR]

Introduction and summary A byproduct of improved information technology has been a loss of privacy. Personal information that was once confined to dusty archives can now be readily obtained from [...]

The Cox-Ingersoll-Ross and Chen-Scott models of term structure are examined in an effort to explain how yields on short-term and long-term bonds relate. The 'predictability smile' in which spreads between the long- and short-term interests rates seem to forecast changes for the short rates is also examined.

Integrated and cost-effective decision analysis methods of risk assessment help contractors, engineers, and owners to take effective measures in mitigating the uncertainties of construction works. Around 57 subsurface failure modes are qualitatively analyzed to determine the effectiveness of integrated decision analysis method. Assessment of cost and delay related implementation of risk strategies should be carried on and compared with the benefits. An overall periodic updating of risk-assessment is required for the effective management of risk-assessment.

Working Paper 2010-17 December 2010 Abstract: We investigate a fiat money system introduced by the Bank of Amsterdam in 1683. Using data from the Amsterdam Municipal Archives, we partially reconstruct [...]

Working Paper 2008-22 September 2008 This paper presents a monetary-theoretic model to study the implications of networks' collection of personal identifying data and data security on each other's incidence and [...]

Working Paper 2005-19 August 2005 Abstract: The quintessential crime of the information age is identity theft, the malicious use of personal identifying data. In this paper we model 'identity' and [...]

Abstract: An extensive literature in monetary theory has emphasized the role of money as a record-keeping device. Money assumes this role in situations where using credit would be too costly, [...]

This article describes and measures how the Bank of Amsterdam supplied a successful fiat money in a world of specie by offering the unlimited repo of large coins at a near-zero rate. Our data from 1736 to 1791 finds that such liberal access led to volatile loan levels and that the Bank responded with sterilization by means of open market operations. In this way, the Bank held its money stock at a roughly constant level and helped stabilize its value. Profit was another part of the Bank's policy framework, and the pursuit of seigniorage eventually compromised stabilization. [ABSTRACT FROM AUTHOR]

Abstract: What are the benefits provided by a payment system? What are the tradeoffs in public versus private payment systems and in restricted versus open payments arrangements? Modern payment systems [...]

Housing activity grew between 1982 and 1984, as did the use of adjustable rate mortgages (ARMs). Doubt is expressed, however, about trade literature assertions that the ARMs stimulated housing activity. A statistical housing forecasting model is used to show empirically that ARMs did not in fact increase housing consumption very much. The evidence indicates instead that declining fixed mortgage interest rates between 1982 and 1983 promoted much of the housing activity growth. ARM demand can still be rationalized by borrowers' desire to 'smooth' consumption in light of uncertain future incomes, even in circumstances when use of ARMs results in no extra borrower consumption of housing.

Though checks' popularity is now waning in favor of electronic payments, checks were, for much of the twentieth century, the most widely used noncash payment method in the United States. How did such a relatively inefficient form of payment become so dominant? This article traces the historical evolution of the check, focusing on its relation to complementary and competing payment technologies. Originating in the eastern Mediterranean during the first millennium as a convenient form of payment between local merchants, checks became more versatile through the development of negotiability in sixteenth-century Europe. The suppression of banknotes in eighteenth-century England further promoted the use of checks. In the United States, nineteenth-century legislation discouraged other payment methods and eventually led to a nationwide check payment system. In the twentieth century, under the Federal Reserve's leadership, checks expanded rapidly and became the nation's default payment method. The authors discuss some persistent historical themes surrounding checks: checks' ease of use, which provides advantages over other payment methods but creates risk to businesses and banks; checks' sophistication, which evolved through centuries of legal precedent and operational experimentation; and checks' high costs relative to other forms of payment. Checks' traditional dominance of the U.S. payment system, the authors conclude, resulted from historical happenstances. These events gave the check relative advantages that are only now being overcome by electronic payment technologies. [ABSTRACT FROM AUTHOR]

The article discusses the risk management in the emerging payment system. Accordingly, the electronic form of retail payment that is rapidly evolving has the dominant risks of committing fraud, illicit use and data security breaches. It cites that only time and monitoring of problem can tell if the risk is controllable. Moreover, containment is the prevalent risk mitigation technique used by payment system providers to control risk.

Argues that there are certain parallels between the on-line payment environment, which led to the development of online currencies and the physical payment environment which led to the debut of bank notes. Model of debt transfer; Combination of local deposit banking and circulating debt through endorsement; Explanations for the popularity of online currencies; Emergence of a demand for payment technologies.

Focuses on a study which examined the economics of payment finality. Model of transferable debt and finality; Distinction between finality and negotiability; Role of finality in check payment; Association between debit cards and check conversions.

Offers a look at the check payment system in the United States. Resource cost of maintaining a check-based retail payment system; Reasons for the use of check float payment; Features of the check payment system in the country; Proposed changes in the payment system.

Examines the design of wholesale payments network in the banking system. Purposes of the wholesale payments system; Differences between net and gross settlement systems; Interaction between the settlement rules of payments system and the bank's decisions concerning its investment portfolio; Implications of the design of wholesale payments network to policy.

Explores the possible impact of fraud on the forms of retail payment such as electronic cash and stored-value cards. Parties involved in the purchases of goods; Optimal incidence of fraud; Key factors influencing the risk of fraud.

Examines in the standpoint of economic theory whether there is any changes in the forms of retail payment. Conflict of interest that confronts all payment system types; Alternatives to check payment; Descriptions of traditional forms of payment; Conclusions.

Examines the role of the Federal Reserve System in maintaining the integrity of the group of institutions known as the payments system. Check-clearing and electronics funds transfer; Interference in cases of insolvency; Parallels between the financial history of the late nineteenth and early twentieth centuries; National Banking Era experience; Criticality of timing in crisis situations.

Presents a response to a comment on the article on the Lucas critique method for economic policy analysis. Invariance of the underlying deep parameters of reduce-form equations; Usefulness of the equations; Basis of the authors' evaluations.