The WIFPR Blog highlights important research in finance and examines current policy issues. Posts include book reviews, policy briefs, and expert analysis from WIFPR affiliates.
Review of Easy Money: American Puritans and the Invention of Modern Currency by Dror Goldberg
By James Blume In 1692, the summer of the Salem Witch Trials, the colony of Massachusetts finalized its invention of modern currency. For the first time in history, a paper currency with no intrinsic value or credible promise of convertibility was voluntarily used in commerce. The Massachusetts paper “bills” were printed by the state, managed by ...Read More
Review of The Ruble: A Political History by Ekaterina Pravilova
By Alex Royt On March 8, 2022, the Central Bank of Russia (CBR) decided to stop exchanging rubles for foreign currencies. Russia’s invasion of Ukraine the previous month led to sanctions—including the freezing of a majority of CBR reserves— that had made the defense of the ruble’s exchange rate impossible, with the value of the ruble ...Read More
Review of Banking on Slavery: Financing Southern Expansion in the Antebellum United States by Sharon Ann Murphy
By Sean Vanatta In 2005, J.P. Morgan Chase revealed that two of its predecessor banks—legacies of earlier acquisitions and reorganizations—had been complicit in financing American slavery. Together, the banks had “accepted approximately 13,000 slaves as collateral for loans,” the bank explained, “and ended up owning approximately 1,250 of them” when borrowers failed to repay their debts. ...Read More
Swing Pricing: A Tool in the Fight against Financial Fragility
By Itay Goldstein and Yao Zeng Last year’s Nobel Prize in Economics went to Douglas Diamond and Philip Dybvig for their pioneering illustration of bank runs. In a nutshell, banks use investors’ liquid deposit money to invest in illiquid projects like factories and houses. If depositors expect other depositors to take their money out, they want ...Read More
Principles for Regulation in Crypto
By Peter Conti-Brown The collapse of Sam Bankman-Fried’s FTX empire – and his subsequent arrest in the Bahamas in response to a request from the US Department of Justice – has dominated regulatory discussions about crypto, finance, and much else. But as tumultuous and distracting as the FTX drama has been – and the sex, drugs, ...Read More
Research Spotlight: The Value of Undiversified Shareholder Engagement
By Felix Nockher The separation of ownership and control allows shareholders to diversify their portfolios and firms to undertake value generating projects regardless of their level of idiosyncratic risk. However, the universal push for diversification often means that shareholders do not bear sufficient risk to incentivize them to monitor the firms in their portfolios. As a ...Read More
Book Review: Two Biographies of Janet Yellen
By Kaleb Nygaard From evenings as the haute cuisine home chef, to the extra early arrival time at the airport, to the three days dedicated to drilling before each FOMC press conference, Janet Yellen is, at heart, an eager and anxious preparer. Her time management and attention to detail manifested in her college days with a ...Read More
Book Review: The Long Shadow of Default: Britain’s Unpaid War Debts to the United States, 1917-2020 by David James Gill
By Max Harris In 2014, during the centenary of the First World War, Her Majesty’s Treasury announced that Britain would repay its outstanding debts from that tragic conflict. The Allies had long since defeated the Kaiser, but Britain was still spending millions of pounds in interest every year on those age-old borrowings. Repaying (more accurately, refinancing) ...Read More
Research Spotlight: Payment for Order Flow and Price Improvement
By Bradford (Lynch) Levy By most accounts, the past decade has heralded a new age in retail investing—by eliminating commissions retail brokers have “democratized finance.” In place of commissions, retail brokers now rely on payment for order flow (PFOF) to drive revenue. While the elimination of commissions sounds great, there is ongoing debate as to whether ...Read More
Book Review: An Exchange Rate History of the United Kingdom, 1945-1992 by Alain Naef
By Max Harris Exchange rate management is once again in the headlines. The dollar is strong, inflation is rampant, and policymakers around the world are trying to get a grip. Emerging market economies have spent billions to curb depreciation. Advanced economies are feeling the heat as well. In September, Japan’s finance ministry intervened in foreign exchange ...Read More
Welcome to the WIFPR Blog
Welcome to the blog of the Wharton Initiative on Financial Policy and Regulation (WIFPR). This post will introduce you to WIFPR, its mission, its staff, and will explain the blog’s purpose and range. WIFPR was founded by Peter Conti-Brown and Itay Goldstein in 2021 to serve as the leading forum for financial policy discussion at The ...Read More