Design of Financial and Monetary Systems

In a Nutshell

Our “Design of Financial and Monetary Systems” section conducts rigorous research on monetary economics, financial intermediation, and payments. We develop state-of-the-art models and calibrate them to real-world data, aiming to bridge the gap between economic theory and practical applications. In doing so, we address highly relevant issues for Switzerland as a global and innovative financial hub.

Research Areas

Our research focuses on two main areas

1. Money, Banks, and Payment

Central banks, commercial banks, and other financial intermediaries provide technologies and services that are crucial for economic growth. We explore the opportunities and challenges these institutions face in an increasingly digital and interconnected world. Our work in this area models explicitly the modern monetary architecture, as well as day-to-day financial and real transactions. This allows us to address key questions, such as: How effective is monetary policy in a system where commercial banks create most of the money? How and why are certain payment instruments used? And how could innovations, like an e-Franc, affect monetary policy and payments?

2. Financial Stability

Recent turmoil in the banking sector has once again highlighted the possibility of financial collapse and the potentially disrupting effects for Switzerland and beyond. By examining the nexus between financial institutions, markets, and the non-financial sector, we aim to identify systemic risks and propose frameworks to enhance financial stability. Our research covers both traditional financial risks and emerging threats, including those brought by decentralized finance and stablecoins. Through this work, we seek to offer general insights into how regulators and policymakers can safeguard financial systems in the face of evolving challenges. We also propose reforms to banking regulation in Switzerland.