Finance

Reuters reporter Jonnelle Marte writes that researchers from MIT’s Digital Currency Initiative and the Federal Reserve Bank of Boston have developed two different approaches to processing transactions in a hypothetical digital currency. “The first phase of the multi-year project, dubbed ‘Project Hamilton,’ resulted in code that is capable of handling 1.7 million transactions per second,” writes Marte. “Researchers also found the ‘vast majority’ of transactions settled in under two seconds.”

Bloomberg reporter Allyson Versprille spotlights how researchers from MIT and the Federal Reserve Bank of Boston have released a new paper and open-source code, called OpenCBDC, aimed at furthering understanding of how a hypothetical central bank digital currency might be developed. Of the importance of making the software open-source, Neha Narula, director of the MIT Digital Currency Initiative, explains that “we believe that this is the best way to ensure that OpenCBDC is vetted by a large number of people--all of whom will bring unique knowledge, skills, and ideas for improvement.”

Researchers from MIT and the Federal Reserve Bank of Boston have released a new paper and open-source code to help further understanding of how a hypothetical central bank digital currency might be developed, writes Tory Newmyer for The Washington Post. Neha Narula, director of the Digital Currency Initiative, explains that they aimed to “create a flexible system that can work with a variety of models.”

Boston Globe reporter Jim Puzzanghera writes that researchers from MIT’s Digital Currency Initiative and the Federal Reserve Bank of Boston have developed experimental open-source software, called OpenCBDC, to help further examine a potential Central Bank Digital Currency.  Neha Narula, director of the Digital Currency Initiative, said she was optimistic that they could develop a system that “can help preserve strong privacy for users.”

Pierre-Oliver Gourinchas PhD ’96 has been appointed chief economist by the International Monetary Fund, reports Ana Monetiro for Bloomberg. “The economist, a French national who is also program director of international finance and macroeconomics at the National Bureau of Economics Research, was an IMF visiting scholar and the editor-in-chief of the IMF Economic Review from 2009-2016,” writes Monetiro.

Wall Street Journal reporter Mark Hulbert writes that a new study by MIT researchers finds that most investors “can do much better than the one-size-fits-all approach to equity allocations that target-date funds offer for your retirement portfolio.”

A new study co-authored by Prof. Antoinette Schoar finds that the “top Bitcoin holders control a greater share of the cryptocurrency than the most affluent American households control in dollars,” reports Paul Vigna for The Wall Street Journal. “Despite having been around for 14 years and the hype it has ratcheted up, it’s still the case that it’s a very concentrated ecosystem,” explains Schoar.

Prof. Antoinette Schoar and Igor Makarov of the London School of Economics conducted a new study that mapped out every Bitcoin transaction since 2008, reports Fortune reporter Marco Quiroz-Gutierrez. “According to the study, 90% of Bitcoin transactions are not a result of a user buying something with the currency, but rather transactions between a single user’s own crypto accounts,” writes Quiroz-Gutierrez.

In a letter to the Financial Times, graduate student Daniel Aronoff makes the case that the demise of local banks in the U.S. should be examined and regulatory changes should be made to enable them to operate more profitably. “A system that can make small loans to small entrepreneurs not only helps the borrowers, but also promotes a more efficient allocation of resources in the economy," Aronoff writes. 

Gizmodo reporter Mack DeGeurin writes that a new study co-authored by MIT researchers finds that just .01% of Bitcoin buyers control around 27% of the 19 million cryptocurrency in circulation. “This tiny concentration of so much wealth means the Bitcoin rich will likely only get richer if the cryptocurrency continues to increase in value,” DeGeurin writes. “It also means power is less dispersed, which could make Bitcoin more susceptible to systemic risk.”

NPR reporter David Gura spotlights U.S. Securities and Exchange Commission Chair Gary Gensler as he takes a new approach to his role as head of the SEC. After teaching a cryptocurrency course at MIT and serving as the chair of the Commodity Futures Trading Commission under President Obama, Gensler has “promised he’ll unveil new rules across the board as part of an ambitious agenda, from cryptocurrencies to new disclosure rules,” says Gura.

Bloomberg Opinion reporters Peter R. Orszag and Zachery Halem spotlight Prof. Andrew Lo's work examining the relationship between global companies, their equity value, and greenhouse gas emissions. “With carbon prices rising and other climate-protection measures strengthening, it’s reasonable to speculate that company valuations will become increasingly tied to emissions control,” writes Orszag and Halem. 

Prof. Haoxiang Zhu has been named head of the U.S. Securities and Exchange Commission’s Division of Trading and Markets, “where he is expected to help the regulator lead major new policies around equity market structure, among other priorities,” reports Katanga Johnson for Reuters. 

Sloan graduate student Haiyi Zhang and Wellesley College Prof. Courtney Coile are conducting an ongoing research effort to understand how the pandemic changed retirement, writes Washington Post reporter Andrew Van Dam. “They found that workers were less likely to retire if they could work from home. However, they didn’t see evidence that local coronavirus outbreaks nor the local job market had an effect on early retirements,” writes Van Dam.

Gizmodo reporter Tom McKay explores a new report co-authored by Prof. Antoinette Schoar and Igor Makarov of the London School of Economics, which reveals that 10,000 individual investors control one-third of the Bitcoins in circulation. This “inherent concentration makes Bitcoin susceptible to systemic risk and also implies that the majority of the gains from further adoption are likely to fall disproportionately to a small set of participants,” the researchers explain.