J2 AG 11 Alexis Collomb Blockchain Research Topics in economics and finance

hello to all I'm alex ikonn I'm the chair I'm the professor of Finance here and I'm also the coordinator of the economics finance insurance and banking department at Nam so you know I'm particularly happy to see you all and to see this aetherium community conference here within our walls this year so I would ask to give you you know brief talk and say a few words about the sort of research that we are doing that we're trying to do on blockchain topics so just to give you a bit of background I have not prepared any slides you know I'll be quick I think 10 minutes because I'm you know for short talks I'd rather try to capture your attention just hopefully with my voice and you know not get too distracted by my slides so you know just to give you a bit of background we we've started a research initiative with something which is called Institute we bachelier for those of you know Weber CDA was one of the I would say forefathers of modern finance with his PhD dissertation which was called theory of speculation which was published actually in 1905 where to my knowledge it was one of the first actually to use Brownian motion and not to metric Brownian motion to model stock prices with the Institute about strategy we started this this partnership which is called blockchain perspectives joint research initiative we have you know various researchers involved one of them is Primavera the Philippian many others we have doctoral students and we also have you know various sponsors it's actually one of them is BNP and another one we have cities ourselves which is like the research of the city scenic SD Depot a constellation which is a bi centenary French institution so you know just to I can short we I'm just going to briefly cover where I think the interesting action is going on in you know whether it's economics finance or insurance and I will be happy to answer questions afterwards especially as we fund you know we have the ability to fund selected projects if any of you happens to be interested and that's also one of reasons that I wanted to give this brief talk to try to you know capture talent sort of speaking there's there's a nice a great German actually writer that I like whose name is iron-rich von Kleist and I don't know if I guess that you know a few of you know who is but he's sort of forgotten now but he's written a great treatise on how ideas come as you speak so you know my speech is not so well prepared and I will see and I'm gonna see if it if it works so within you know economics just to go briefly I mean I think there's actually there's a talk on game theory in some other auditorium you know I'm sure you've all heard of you know crypto economics and game theory and so forth I think you know one of the the great values of blockchain and especially consensus protocols is that you know it's showing again I mean it's sort of reviving in some respect some game theoretic aspects and giving them a sort of live experiment to to study so to the best of my knowledge at least as there's work which is been done recently actually published by people at the to do School of Economics on you know stochastic games and how you can view the the proof-of-work protocol as you know stochastic game and how actually what they proved which I find particularly interesting because you don't hear it so much is that you know it can lead to multiple equilibria hence you know there's some you know potential source of instability there but one of the things that we are most interested here is really on and particularly myself is on you know monetary policy so what I would call the you know the macro aspect really what impact blockchain is gonna have on the monetary policy and you know I don't like to phrase it as a as a truth because I have absolutely for me it's it's really an ongoing research and you know if I come with strong conclusions maybe I'll have give a talk in six months but you know what I for me you know it's sort of clear that the one of the potential weakness of you know cryptocurrency systems as you see them now is that there's no link to you know this usually no formal link to macro data and macro indicators so you know to make it very short the you know I think that when you looked at the way central banking operates and the way for instance the you know the different board of governors of central banks and so forth you know gather on a periodic basis to decide upon you know the for instance quantitative easing and things like that you know I think it's it's sort of trivial to say that if you look at the origins of Bitcoin and so forth this was you know precisely the thing that you know one should avoid at all cost and so you know there's a lot of attractiveness obviously in having an automatic dramatic monetary policy now you know from my standpoint one of you know what I see is really lacking right now is you know the connection between the sort of closed system and the real economy and how you know for instance you could have a protocol that modulates some of the for instance the minting you know depending upon some macro data and you know I'm working with a group actually which is advising you know potential IC o---- and I was asked to think about a little bit about these questions and you know what we call the token economy and for instance you know if you do a nice view on the way to reserve what is called the monetary reserve works and it's program is I think right now a great area of research now you know if you look at ICUs there's also obviously things like you know auctions and so forth and you know the economic literature is extremely rich with you know with auction mechanisms and and we says less I think too many interesting papers with respect to you know talk and sale mechanisms but you know for me the really one very interesting thing is the the monetary policy now another subject a research and I've got one of my doctoral students who's working on it and you actually may know her because it's well I won't mention their name but she's working on the value of intermediation so you know I used to do a bit of trading before and you know it's always interesting to have a contrarian perspective you know most of the conference that I've attended in over at least not so much now but let's say you know in 2016 and 2017 when I went there I always had the sense that it was taken for granted that decentralization was a superb thing no matter what you know and so you know I think it's also interesting to really understand the advantages of something to look at the also the merits of its opposite and you know so the value of intermediation and these value of centralized apron or really understanding in economic terms what you gain with the centralization with respect to you know centralized systems and vice versa is I think another actually very interesting area of research upon which I've not read yet you know to the best of my knowledge any you know any paper that I find particularly you know compelling if you look at you know intermediation if it has existed let alone because of the you know technological inability to have decentralized systems you know before Satoshi nakamoto's paper and so forth and you know the technological solutions that have been found you know let's say within within the last the last ten years but if you just look at the you know the intermediation you know it has existed because it has some degree of merits and it has some you know one of them is specialization you know I'm sure you've all read about you know you remember economic courses on you know Ricardo and how you know economies in countries tend to specialize and how it you know drives international commerce and so forth well you know intermediation in my view is you know one of its merits and is one of its reasons is really specialization so you know that and stop on that but i think that's you know that that's another great area of research and i think understanding that really helps you understand actually what you gain by having completely you know decentralized systems or you know partially partially decentralized systems now in you know with respect to finance I'm you know I teach derivative schools here I used to work you know in options and in derivatives before you know as you've probably there's been some talks actually and they will be you know throughout these three days you know what people like very well and so forth and you know I think they they're doing a very interesting and and a great job but you know that there's lot of applications and research going on in finance right now you know obviously one of them is you know it's not particularly the sexy sometimes for you know some people because it's you know what it's called post trade infrastructure or in other words you know the fabric of financial markets and the you know the infrastructure of financial markets so one particular interesting area is one particularly