Publications

1) Blockchain Congestion Facilitates Currency Competition

Journal of Economic Theory, May 2026

Blockchain capacity constraints induce congestion when many users want to transact at the same time. This paper argues that blockchain capacity constraints, coupled with the need to incentivize miners to maintain blockchain security, lead to low inflation outcomes when cryptocurrencies compete for user demand. If two coins are both used as medium of exchange, a low-inflation coin must experience higher congestion than a high-inflation coin; otherwise demand for the latter is zero. Lowering coin growth rates then boosts transaction demand, limiting the equilibrium inflation rate. However, some gains from trade are not realized due to congestion and the cost of blockchain security. The paper also identifies anti-competitive dynamics in Proof-of-Stake: while higher coin growth reduces transaction-based demand, it may increase demand from validators even more.

Working papers (active)

2) Private Money Mechanisms         (previously circulated as Currency Competition with Firms)

revision requested, Journal of Economic Theory

This paper studies efficiency properties of allocations implemented in monetary exchange when one party directly involved—the producer of consumption goods—designs the mechanism governing the terms of trade. When money is public, the efficient allocation is implementable in principle but seller-optimal mechanisms do not implement it. When money is private, the seller implements the efficient allocation in any monetary equilibrium. When both monies co-exist, public money only circulates when it does not carry an opportunity cost. However, optimal private monetary policy is not time-consistent, unless the issuer backs its currency with assets of the same denomination issued by some third party. Furthermore, the efficient allocation is not generally implemented if private money facilitates third-party trade, or if the seller is restricted to price posting. 

3) Bank Resolution, Deposit Insurance, and Fragility (with Alkis Georgiadis-Harris)

revision requested, Review of Finance

After the Great Financial Crisis, resolution was introduced to recapitalize banks previously considered `too big to fail' without the use of costly bailouts. At the same time, deposit insurance facilities provide explicit guarantees to promote stability. In a model with these ingredients, we find that banks may shorten the maturity of their debt, causing excess fragility in an effort to channel resources towards uninsured creditors and reduce their cost of funds. This undermines resolution and forces the government to conduct bailouts after all. Neither policy achieves its desired goal: resolution does not successfully recapitalize banks, and deposit insurance spurs rather than curbs fragility. Our model suggests that resolution and deposit insurance must be complemented by capital requirements. We document an increase in deposit-financing for the largest US banks since resolution has been in effect - but not for smaller ones, indicating a shift in balance sheets consistent with our theory.

4) Achieving Consensus on Blockchains (with Zahra Ebrahimi, Bryan Routledge and Ariel Zetlin-Jones)

Without central authority, consensus on a shared record is self-fulfilling: a ledger is valuable only if others recognize it, yet others recognize it only if they expect it to remain valuable. We develop a dynamic game of decentralized record-keeping—applying directly to blockchains—to study when consensus can be sustained as an equilibrium outcome. The familiar vulnerability of Bitcoin's longest-chain rule reflects a broader weakness of strategies that condition only on the current ledger state. History-dependent strategies sustain consensus more robustly. We also identify a blockchain analog of the Grossman-Stiglitz paradox: strategies cannot achieve both informational efficiency and consensus.

5) Optimal Financial Intermediation  (with Yuliyan Mitkov)

Financial fragility is often viewed as a useful instrument of market discipline. A prominent example is Diamond and Rajan (2000, 2001), who argue that fragile intermediaries arise endogenously to solve the hold-up problem studied by Hart and Moore (1994). We revisit this framework and show that the optimal financial intermediation arrangement resolves the hold-up problem without inducing fragility. Instead, we identify government guarantees as a rationale for deposit-financing and then explore the role of contracting frictions in generating fragility. The model yields testable predictions consistent with empirical regularities in the fund industry and speaks to the recent shift in credit markets from banks toward non-bank financial intermediaries.

6) Smart Banks (with Alkis Georgiadis-Harris and Yuliyan Mitkov)

Since Diamond and Dybvig (1983), banks have been viewed as inherently fragile. We challenge this view in a general mechanism design framework. Our approach allows for flexibility in the design of banking mechanisms while maintaining limited commitment of the intermediary to future mechanisms. We find that the unique equilibrium outcome is efficient. Consequently, runs cannot occur in equilibrium. Our analysis identifies the ultimate source of fragility: banks are fragile if they cannot collect and optimally respond to useful information during a run; and not just because they are illiquid in the short-run. Finally, we leverage these insights to offer two ideas on improving stability: one building on existing demandable debt arrangements, which is viable in the short-term; and a longer-term solution utilizing technologies surrounding 'smart contracts.'

Working papers (currently dormant)

7) Measuring Bail-in Credibility (with George Pennacchi)

Teaching

Lecturer, University of Bonn, Digital Finance (MSc)

I designed a course on blockchain economics and digital money. Students learn about the economic limits of blockchains and develop an understanding of currency competition in models of money as medium of exchange.

I won the teaching excellence award as  best lecturer for all master elective modules.

Lecturer, University of Bonn, Seminar "Wissenschaftliches Arbeiten" (BSc)

Seminar that introduces principles of research to undergraduate students

Teaching Fellow, LSE, Ec424  Monetary Economics and Aggregate Fluctuations (MSc)

Teaching Assistant, LSE, Ec210  Intermediate Macroeconomics (BSc)