Lee, Michael Junho
[Verfasser:in];
Martin, Antoine
[Verfasser:in];
Townsend, Robert M.
[Verfasser:in]
;
Michael Junho Lee and Antoine Martin and Robert M. Townsend
[Mitwirkende:r]
Anmerkungen:
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Beschreibung:
Trades in today’s financial system are inherently subject to settlement uncertainty. This paper explores tokenization as a potential technological solution. A token system, by enabling programmability of assets, can be designed to eradicate settlement uncertainty. We study the allocations achieved in a decentralized market with either the legacy settlement system or a token system. Tokenization can improve efficiency in markets subject to a limited commitment problem. However, it also materially alters the information environment, which in turn aggravates a hold-up problem. This limits potential gains from resolving settlement uncertainty, particularly for markets that depend on intermediaries.