Research Exchange: September 2026

Selected Outside Research

Digital Rails and Bank Intermediation

This paper demonstrates how adoption of instant payment systems may change banks' balance sheet composition. The analysis compares German savings banks, which adopted instant payments starting in July 2018, with neighboring credit cooperatives where adoption came somewhat later, as exogenously determined by each group's central service provider. Firms with accounts at the adopting banks cut their overnight deposits by about 2 percent and reduced their overdraft usage, while deposit interest rates remained the same. Household deposit balances did not change. Affected banks raised their liquid assets by roughly 12 percent, all of it in central bank reserves. Thus, the analysis suggests that instant payments allow firms to economize on precautionary cash while increasing banks' demand for central bank reserves.

Digital Rails and Bank Intermediation

When Expertise Matters: Loan Officer Industry Specialization, Loan Pricing, and Contract Design

Past research indicates that the terms of a corporate loan depend on which individual loan officer handles it, but the reasons have been poorly understood. This paper asks whether a loan officer's experience in lending to a particular industry helps explain differences in loan terms. The author hand-collected large, syndicated loan agreements from 1995 to 2023 and matched them to the loan officers who arranged them, measuring specialization as the share of that individual's past loans made in the borrower's industry. The analysis finds that borrowers working with more specialized loan officers receive a significantly lower interest rate and that these officers wrote more customized contracts. These loans were also no more likely to default or be downgraded, which points to loan officers having better information rather than providing overly generous terms.

When Expertise Matters: Loan Officer Industry Specialization, Loan Pricing, and Contract Design

Mainstreaming Tokenized Finance: How Money Market Funds Are Going Digital

This study examines how crypto investors allocate their investments between tokenized money market funds - one of the fastest growing categories of tokenized assets - and stablecoins. The analysis relies on blockchain transaction records, focusing on investor behavior around sudden drops in crypto prices. Following such drops, total stablecoin holdings fall sharply while total tokenized fund holdings fall only modestly. Within individual wallets, holdings of the tokenized money market funds rise (the decline in overall holdings is tied to a drop in number of investors) while stablecoin holdings fall, especially in wallets holding more than $10,000. The authors interpret this as investors seeing stablecoins mainly serving as a way to trade and the tokenized funds as a place to store value and earn interest during stressful periods. They conclude that, having grown "by an order of magnitude in under 2 years," tokenized money funds are well positioned to become a core safe asset in digital finance, supporting broader institutional participation.

Mainstreaming Tokenized Finance: How Money Market Funds Are Going Digital

The Impact of Macroprudential Policy Fragmentation on Corporate Lending - Evidence from a Novel Indicator

Since the financial crisis, Europe has built up a fragmented regulatory capital environment for banks, characterized by a patchwork of capital rules that differ across countries. This paper builds a bank-by-bank measure of regulatory capital fragmentation that captures how many rules a bank faces, how much the rules differ across countries and how often they change, and then explores its relationship to bank behavior. Banks facing more regulatory fragmentation maintained larger capital buffers, consistent with their building a precautionary cushion against uncertainty. These banks also lent less to businesses, with loan growth falling by roughly half a percentage point, controlling for borrower-specific characteristics. The authors conclude that an overly fragmented or frequently revised framework may unintentionally restrain lending.

The Impact of Macroprudential Policy Fragmentation on Corporate Lending - Evidence from a Novel Indicator

How Did CECL Affect Bank Lending

How banks reserve for expected loan losses affects their measured capital and may therefore influence their lending behavior. This paper tests that proposition in the context of banks' required adoption of the current expected credit loss (CECL) framework beginning in 2020. The analysis employs a variety of empirical approaches that exploit variation in the timing and impact of CECL adoption across firms and loan products, relying on regulatory data from early 2016 through mid-2024. The authors find that each 1-percentage-point increase in loan loss reserves (as a share of loans) reduced lending by about 0.85 percent per quarter, implying that the accounting rule reduced annual loan growth by roughly 0.77 percentage points, or about 12 percent of average growth. The effect was stronger at banks with thinner capital cushions, and there was no clear change in dividends or share buybacks, suggesting that banks adjusted primarily by lending less.

How Did CECL Affect Bank Lending

When Higher Stakes Weaken Security

This study examines the effectiveness, in validating high-value transactions, of blockchain-based payment systems that rely on computationally intensive "proof-of-work" calculations. Analyzing records from Ethereum comprising 14 million blocks from 2015-2022, the analysis suggests that the operators who validate transactions on these systems, known as miners, may engage less efficiently as transaction risk rises due to misaligned incentives arising from how they are remunerated for their efforts. Specifically, sudden, risk-driven increases in transaction fees push miners to "cheat" by rejecting and replacing valid blocks to collect more fees. The authors conclude that this kind of incentive-based validation on blockchain settlement systems can weaken "precisely when the stakes are high."

When Higher Stakes Weaken Security

Hidden by Complexity? Measuring Stablecoin, Crypto, and Decentralized Finance Ecosystems

This paper assesses common approaches to quantifying usage of cryptocurrencies, with particular attention to Bitcoin, Ethereum and Tron, using about 100 billion records from a research platform run by central banks. It argues that estimates of market size, transfer totals and funds held in lending or trading applications depend heavily on the assumptions behind them, and that "even modest adjustments in data treatment can lead to substantial differences in inferred economic activity." The authors conclude that commonly used metrics, such as transaction volumes, market capitalization and total value locked, "often suggest a degree of accuracy that is not supported by the nature of the underlying data." Therefore, on-chain indicators should be treated as "noisy approximations" and reported as ranges, backed by technical classification and expert judgment, with each network analyzed separately.

Hidden by Complexity? Measuring Stablecoin, Crypto, and Decentralized Finance Ecosystems

What Determines Banks' Excess Demand for Reserves?

Little evidence exists on what drives an individual bank's appetite for reserve balances at the central bank. This paper seeks to shed light on that question using Sweden's weekly central bank auction, in which each bank chooses between a slightly higher-paying one-week security and leaving money in a reserve account, thereby revealing their preference for reserve balances. The analysis tracks 27 banks from March 2023 to May 2025, where these banks fall into two groups: (i) active traders in short-term lending markets; and (ii) those that "never participate in any interbank market segment." The analysis shows that the inactive group holds much larger reserve balances relative to its size and adjusts them slowly. Active banks also keep extra balances despite the small cost, holding more when their payment flows are less predictable or borrowing from other banks is pricier and less when lending markets are busy.

What Determines Banks' Excess Demand for Reserves?

Featured BPI Research

A Post-Pandemic Consumer-Centered View of Fraud: Consumer Characteristics and Fraud Victimization

This post, the second in a BPI research series, draws on a new fraud-focused module added to a federal consumer survey to examine which personal characteristics make people more likely to fall victim to fraud or scams, lose money or report the incident, building on an earlier post that covered how common fraud is and how it happens. The research finds that lower and more unstable income, along with less patience about delaying financial rewards and a tendency to gamble, are all linked to a higher chance of being defrauded. Conversely, higher earners are both less likely to be victimized and less likely to suffer serious financial losses when they are. It also finds that consumers with overall financial dissatisfaction - feeling that they are barely getting by or that their money won't last, or doubtful they'll ever have what they want - are at greater risk of fraud and bigger losses. The study also uncovers uneven patterns in who reports being defrauded: for instance, impatient victims are less likely to report incidents, while people who gamble or who are financially strained are more likely to.

A Post-Pandemic Consumer-Centered View of Fraud: Consumer Characteristics and Fraud Victimization

A Post-Pandemic Consumer-Centered View of Fraud: Financial Distress, Demand for Credit and Trust in Financial Institutions

This post, the third in a BPI research series based on a new fraud-focused module of a federal consumer survey, moves beyond who gets defrauded to examine the broader ripple effects of fraud - including financial stress, borrowing behavior and trust in banks and lenders. The research finds that people who experience fraud are notably more likely to struggle paying everyday bills, both in the past year and looking ahead. It also finds that fraud victims are more likely to consider seeking a loan or credit card but then back out, often based on distrust of the lenders they encountered - showing that the costs of fraud extend beyond direct financial costs. The author concludes that fraud's damage can extend well past the immediate loss, weakening victims' financial stability and their trust in the financial system in ways that could limit their ability to handle future financial shocks or to improve their financial standing over time.

A Post-Pandemic Consumer-Centered View of Fraud: Financial Distress, Demand for Credit and Trust in Financial Institutions

How Well Do Central Bank Financial Stability Reports Predict Risk? A Follow-Up AI Analysis

This follow-up post extends an earlier BPI study - which used AI to test whether three major central banks' financial stability reports actually predict real risks - by applying the same method to the Swiss National Bank, whose annual report has guided real decisions about raising or lowering capital buffers required of Swiss banks since 2003. The findings mirror those from the Fed, European Central Bank and Bank of England: The Swiss reports never identified a genuinely new risk that later came true, several risks they flagged as serious (notably around real estate and mortgage markets in 2013-2016) never led to actual market stress or bank losses and - like the other central banks studied - the reports failed to foresee the dangers that caused the 2008 financial crisis. In at least one case, a risk the Swiss National Bank flagged in 2016 had already been publicly identified by a major Swiss bank the year before, reinforcing the earlier finding that these reports tend to lag rather than lead market awareness.

How Well Do Central Bank Financial Stability Reports Predict Risk? A Follow-Up AI Analysis

Outside Blog Posts and Research Notes of Interest

The Profile, Patterns and Pitfalls of Social Media-Informed Retail Investors

Buy Now, Pay Later: Academic Insights and Open Policy Questions

European Banks and Private Markets: Mapping the Linkages

Running on Investment Funds and Liquidity Risk Management

How Much Nonbank Business Lending is Indirectly Funded by Banks?

Stablecoin-on-Creditor Violence

Will U.S. Firms Adopt Stablecoins?

Conferences & Symposiums

10/6/2026 - 10/7/2026
2026 Annual Community Banking Research Conference
Federal Reserve Bank of St. Louis
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10/29/2026 - 10/30/2026
MIT GCFP 13th Annual Conference | "Financial Regulation in an Era of Innovation and Disruption"
Cambridge, MA
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10/30/2026
Sixth Biennial Conference on Auto Lending: Announcement and Call for Papers
Federal Reserve Bank of Philadelphia
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11/2/2026
Financial Markets Group Fall Conference
Federal Reserve Bank of Chicago
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11/4/2026
2026 Stress Test Modelling Symposium
Federal Reserve Bank of Boston
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11/5/2026 - 11/6/2026
2026 Federal Reserve Stress Testing Research Conference
Federal Reserve Bank of Boston
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11/13/2026
Bank Funding Conference: Bank Funding in the Age of Instant Finance
Federal Reserve Bank of Dallas
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11/13/2026
NY Fed-ECB Conference on Nonbank Financial Institutions
Federal Reserve Bank of New York
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11/18/2026 - 11/19/2026
15th Annual Research Workshop: Efficient and Proportionate Regulation for a Competitive Financial Sector
European Banking Authority (Paris, France)
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11/19/2026 - 11/20/2026
International Conference on Payments and Securities Settlement: Announcement and Call for Papers
Deutsche Bundesbank (Conference Center in Eltville, Germany)
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11/19/2026 - 11/20/2026
2026 Financial Stability Conference
Federal Reserve Bank of Cleveland
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11/20/2026
Pacific Basin Research Conference: Announcement and Call for Papers
Federal Reserve Bank of San Francisco
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1/6/2027
Federal Reserve Day-After Conference on Financial Institutions and Markets
Federal Reserve Board, Washington D.C.
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2/18/2027
2027 Columbia/BPI Bank Regulation Research Conference: Announcement and Call for Papers
Columbia University, New York City
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5/6/2027 - 5/7/2027 
14th Annual Conference on Financial Market Regulation: Announcement and Call for Papers
Securities and Exchange Commission, Washington, D.C.
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