Redeemability and Currency Adoption: Evidence from a Digital Platform
Prof. Yang YOU
Assistant Professor of Finance
HKU Business School
Hong Kong University
Date: 22 October 2025 (Wednesday)
Time: 16:00-17:30
Venue: E22-G004
Host: Prof. Wenjin KANG, Professor in Finance
Abstract
Many currencies are backed by redemption promises – including historical gold-backed currencies, free bank notes, and emerging stablecoins – but little evidence or theory informs currency redemption policy. We study the impact of redemption policy on steady-state currency acceptance and flows using unique transaction data from a digital platform. We leverage both cross-sectional variation in redemption convenience and unexpected changes in redeemability. We show in a search-theoretic framework that redeemability may induce currency adoption at zero steady-state cost. However, the evidence is more consistent with a heterogeneous –agent model in which redeemability is both costly and necessary for money circulation. An implication is that optimal policy may impose some degree of redemption friction.
Speaker
Prof. Yang YOU is an Assistant Professor of Finance from HKU Business School, Yang You obtained his PhD degree in Economics from Harvard University in 2021. He also holds Bachelors in Mathematics and Economics from Tsinghua University. Prior to joining HKU, he worked for Tower Research Capital as quant trader and interned at Facebook Libra.
Yang’s research interest lies in Fintech, Economics of Internet, Alternative data & asset prices, Culture & Institution, and Chinese Economy.
All are welcome!
