Blockchain and the International Financial System
Explores how blockchain, distributed ledgers, smart contracts, and encryption can impact legacy systems and alter domestic and international ecosystems. Topics include money and banking in the digital age, trade and payments intertwined, and rethinking the international monetary system. The computer science underlying cryptocurrency, stable coins, tokenization, digital assets, platforms, and computational algorithms is synthesized with economics and its use of contract theory, mechanism design, general equilibrium modeling, and monetary theory.
Spring 2025 · Blockchain and the Design of Financial Systems
This course synthesizes the computer science technologies underlying cryptocurrency, blockchain, tokenization, platforms, and computational algorithms with the economics tools of contract theory, mechanism design, general equilibrium theory, and monetary theory. The goal is to understand the assumptions, existing shortcomings, and potential impact on legacy systems of distributed ledgers, smart contracts, and encryption and to explore possibilities for new financial designs and for regulation.
Readings
- Robert M. Townsend (undated), Introduction (Chapter 1), “Key Elements and Patterns in Theory and Early European History,” University of Chicago - Population Research Center 93–95.
- *Krislert Samphantharak and Robert M. Townsend (2009), Households as Corporate Firms: An Analysis of Household Finance Using Integrated Household Surveys and Corporate Financial Accounting. Econometric Society Monograph Series No. 46; Cambridge University Press
- Anil Jain, Robert M. Townsend, and Fan Wang (2024), “Timing Lumpy Investments with Informal Bridge Loans and Clunky Formal Loans: Evidence from Thailand.” Conference paper, University of Houston BREAD-Asia (NUS) December 19, 2024.
- Fernando Alvarez, Anan Pawasutipaisit, and Robert M. Townsend (2023), “Currency in Village Economies: Large Welfare Losses from the Mismanagement of Petty Cash.” Conference paper (?), 21 February 2023.
- Archawa Paweenawat and Robert M. Townsend (2024), Inequality and Globalization. Princeton University Press.
- Thomas Ernst and Chester Spatt (2024), “Regulating Market Microstructure,” 12/30/24 draft prepared for Annual Review of Financial Economics , 2026.
- **Joseph M. Ostroy and Ross M. Starr (1990), “The Transactions Role of Money.” In Benjamin M. Friedman and Frank H. Hahn (eds.), Handbook of Monetary Economics I . North Holland.
- *Robert M. Townsend and Neil Wallace (1987), “Circulating Private Debt: An Example with a Coordination Problem.” In Edward C. Prescott and Neil Wallace (eds.), Contractual Arrangements for Intertemporal Trade, 105–120. University of Minnesota Press.
- *Mariano Spector and Robert M Townsend (2018), “Notes on Circulating Private Debt, Crashes.” Working Paper, MIT.
- JP Morgan (2023), “Transforming the Way Money, Information, and Assets Move around the World.” Jpmorgan.com.
- Victor Orestes and Robert M. Townsend (2023), “Brazil’s Central Bank Digital Currency: Improving Financial Infrastructure with Programmability.” LIFT Papers No. 5, Banco Central do Brasil.
- **Thomas H. Cormen et al. (2009), Introduction to Algorithms , third edition, part VI. MIT Press.
- Daniel Aronoff and Robert M. Townsend (2023), “A Smart Contract to Increase Intermediation Capacity in the Repo Market.” Working paper, MIT.
- **T. R. Hurd (2016), Contagion! Systemic Risk in Financial Networks . Springer.
- **Martin Summer (2013), “Financial Contagion and Network Analysis.” Annual Review of Financial Economics 5(1): 277–297.
- Robert M. Townsend (1993), The Medieval Village Economy , chapter 5. Princeton University Press.
Prerequisites & course information
Prereq: None G (Spring) 4-0-8 units
Sources
- Course catalogue ↗2026–2027
- MIT OpenCourseWare ↗Spring 2025
- MIT OCW syllabus ↗
- MIT OCW readings ↗
- Historical MIT OpenCourseWare offering. Named reading entries and schedule topics are automatically extracted from the linked source pages.