Investing in Digital Assets During the COVID-19 Crisis

Faculty of Business and Economics,  Peter Merian-Weg 6, Basel
Speaker: Prof. David L. Yermack
Host: Prof. Rolf Weder

Prof. Yermack from the NYU Stern School of Business was invited to speak about the role of crypto currencies with a focus on the U.S. during the COVID-19 crisis. For the first time, the event took place in a hybrid format where Prof. Yermack was presenting online via Zoom and actively interacted with the audience, partly present in a lecture room at the Faculty of Business and Economics of the University of Basel and partly via Zoom.

Starting with the alleged characteristics of Bitcoin as a form of “digital gold” (to some degree an unjustified argument according to the speaker), Prof. Yermack outlined very profoundly the growing need for crypto currencies and Blockchain by the U.S. economy and the U.S. economic policies. Yermack gave an interesting example. The objective of the U.S. Treasury’s recent stimulus payment was to provide financial support to U.S. citizens in need as a consequence of the pandemic. However, many citizens did not receive their money because they were not registered with an official bank account. Using Blockchain as a form of a decentralized database would, according to the speaker, allow more financial inclusion with efficient and accurate transfers of funds to those in need. Furthermore, Prof. Yermack explained how the zero-lower bound for interest rates can be escaped with sovereign digital currencies (a central bank digital currency). Moreover, it was argued that the U.S. is getting under pressure by China’s sovereign digital currency to issue one of their own to catch up.

With the presentation and subsequent discussion, it became evident that the pandemic is likely to promote a wide adoption of Blockchain and to further reduce the importance of cash. Overall, the speaker showed the importance of this new technology for the banking system, the central banks and the society as a whole. The event was attended by more than a 100 people.