Stablecoin disintermediate banks not only by eroding banks’ deposit franchises but also by transmitting liquidity stress to the banking system. Using transaction-level data linking on-chain transactions to wholesale interbank payments, we find direct evidence of liquidity-driven bank disintermediation. Banks operate “narrowly” to support liquidity-hungry stablecoin deposits – requiring substantially larger bank reserve balances to mitigate potential shortfalls. Our results substantially broaden the scope for stablecoins to disintermediate banks, contract lending, and complicate monetary policy implementation.

I document the emergence of composed asset transformation in the tokenized US dollar market, where tokenized assets are re-bundled to alter access, liquidity, and risk characteristics to broaden and enhance the set of tokenized US dollar instruments. "Naive" composability fundamentally conflicts with the provision of pooled arrangements needed for liquidity provision, risk-sharing, and capital backstops.  I offer principles and direction for building a sustainable, composable system.

Money can be programmed without programmable money, and programmable money does not impede on the singleness of money, 

I propose a quantitative framework to track systemic risk arising from cyber vulnerabilities of U.S. financial system. Synthesizing financial, economic, cyber, and network data that covers thousands of financial institutions and technological firms, I develop an index that tracks financial-system-level cyber vulnerability (SCV) for the financial system. Geopolitical risk, ransomware and malware incidents, and seasonal factors significantly drive the estimated adversarial component. Large technology firms, including Microsoft, Google, Cisco, and Apple, emerge as key contributors to system cyber vulnerability. 

Digital privacy creates tension between freedom and control. We study payment system design when legitimate and illicit usage is endogenously determined by privacy choices. Distinguishing identity from transaction privacy, we show that identity-private systems are inefficient because they disproportionately scale illicit activity. Although optimal transaction privacy may require fine-grained targeting of illegal activities, the possibility of criminal innovation favors a simple and robust design: a uniform transaction-size threshold that limits misuse and caps rents from future illicit technologies. Applying the framework across payment infrastructures, we show that public blockchains outperform legacy systems under moderate enforcement, but not under excessive enforcement.

Financial infrastructures drift toward systemic concentration, and under-invest in technological resiliency in the long-run, exposing the entire financial system to "tech drag" -- system-wide operational and cyber disruptions.  We find evidence in tri-party repo settlement: the exit of duopolist resulted in a significant drop in IT-related investment by the sole provider, even as peer firms ramp up investment.

The US dollar system is undergoing dramatic digital transformation, with stablecoins leading the way.  Two key dimensions will sculpt the future of the tokenised ecosystem: access and return.

Limited commitment is an age-old problem in financial markets. Tokenization resolves commitment problems through programmatic settlement guarantees, and can deliver greater collateral efficiency. It can, however, exacerbate information problems. Optimal token system requires either joint consideration of trade and settlement protocols, or deployment of prudently designed programmable contracts.

Legacy systems partition private information but are vulnerable to settlement fails. A token system with dynamic ownership representation can eradicate settlement risk with several primitive restrictions. 

We use sanctions imposed by the U.S. Department of Treasury on Tornado Cash (TC), a smart contract protocol, to study the impact and effectiveness of regulation in decentralized systems. Sanctions had an immediate and lasting impact on TC by market reaction, transaction volume, and diversity of users. Still, net flows into TC contracts recover to and surpass pre-announcement levels for most pools, supporting viability of TC. Evidence on cooperation at the settlement layer is mixed: the aggregate share of non-cooperative blocks increases over time, but a shrinking number of actors process Tornado Cash transactions, indicating a fragility to the sustainability of censorship-resistance. Non-cooperation is not explained by tokenomics, and changes in perception around legal authority and clarity of regulation appears to be a key factor for whether to cooperate.

Privacy-enhanced digital cash enhances welfare by enabling users to opt out of data monetization, and pushing firms to share surplus generated from private data.

Decentralized asset markets form tiered structures, where dealers make markets for local clients, and trade with other dealrs to unwind positions. A feedback loop arises between market liquidity and inter-dealer liquidity that makes markets fragile. Post-trade info can improve market functioning, but centralized platforms do the opposite: they maximize information problems to maximize the value of data. This rent-seeking behavior leads to the "worst" possible outcome.

What determines long-run liquidity in collateralized lending markets? What are the short- and long-run effects of policy interventions designed to restore liquidity? Asset classes can permanently fail to be considered good collateral after adverse shocks due to dynamic coordination failures in collateralized lending markets. Policymakers without commitment may fall into intervention traps in which ex-post efficient liquidity injections cause permanent declines in collateral quality.

Workers build their networks immediately following a negative credit event, even at firms far from bankruptcy. Heightened networking activity is associated with contemporaneous and future departures, especially at highly-rated firms. Latent build-up of connections triggered by credit deterioration represents a source of fragility for firms.

A tor-periphery network, a core-periphery network topology with a layered core of agents, emerges in transmission networks where the goal is to obfuscate links between senders and receivers from an enforcer.  Observed in insider trading, money laundering, and communication networks.

How do changes in market structure impact accessibility to credit? Following the introduction of publicly disclosed Comprehensive Capital Analysis and Review stress tests, market shares of affected banks shrunk by about 2.1 pp. Impact significantly differs across regions, with shares dropping an additional 1.1 pp in non-urban areas. Credit substitution by other lenders is imperfect. Originations drop in areas more reliant on CCAR credit. Borrowing conditions diverge as well: non-urban counties see fewer subprime originations and average borrowing costs rise. Our results suggest that policies geared toward financial stability asymmetrically impacted local credit conditions and inadvertently amplified the urban-rural divide.

A cyber attack on the financial system has greater systemic consequences  during stressed financial conditions. Traditional tools of policy interventions to stabilize markets can mitigate cyber vulnerability, but are blunt and expensive.

We model how a cyber attack may be amplified through the U.S. financial system, focusing on the wholesale payments network. We estimate that the impairment of any of the five most active U.S. banks will result in significant spillovers to other banks, with 38 percent of the network affected on average. 

Formalizes a cyber risk definition and classification with the goal of supporting the work of regulatory and supervisory agencies and private sector participants in facilitating cyber risk management in the financial sector. 

Firms with strong corporate culture are less dependent on explicit contracts to retain human capital. We document implications for firms' investment decisions and other outcomes.

Uncertain booms are periods of expansionary investment with "really good" or "really bad" hidden states. The economy become fragile to negative news and can suddenly collapse.