Beijing Institute of Mathematical Sciences and Applications

Ruize Gao , Liyan Han , Zhen Li , Jin Liu , Fei Long , Dongbo Shi , Ke Tang , Li Wan , Qi Zhang

Xiaolin(Sylvia) Xiao

Friday, April 17, 2026 3:00 PM - 4:00 PM

A3-2-303

Zoom 435 529 7909 (BIMSA)

We study how stablecoins and digital payments reshape taxation, seigniorage, and public debt within a two-sector monetary framework (formal/TradFi vs. informal/crypto). Extending a baseline cash economy to incorporate government bonds, fully reserved stablecoins, or a central bank digital currency (CBDC), we establish four main results. First, the economy exhibits a strict Laffer-curve trade-off between extracting inflation seigniorage and preserving the formal tax base. Second, endogenous sector choices generate multiple macroeconomic steady states with profound regulatory implications. Third, private stablecoins create a severe macro-fiscal tension: while tokens cannibalize fiat seigniorage, issuers' massive demand for reserve assets compresses nominal yields, effectively subsidizing government borrowing. Systemically, however, this reserve hoarding starves commercial banks of collateral, crowding out formal trade. Furthermore, a monopolistic issuer restricts token supply, which yields a safer intrinsic reserve ratio and eases bank collateral scarcity, but substantially diminishes the fiscal yield subsidy. We also calibrate the model to the U.S. economy to quantify this macro-fiscal tension and the threshold at which issuers' bond holdings constrain TradFi collateral. Lastly, a parallel CBDC extension highlights how optimal policy and welfare implications diverge across alternative paths of currency digitalization.

Dr. Xiaolin(Sylvia) XIAO is an Associate Professor of Economics, Guanghua School of Management, Peking University. Her main research areas are monetary economics and macroeconomics. Before joining PKU, she worked at University of Wisconsin-Madison, U.S.A., and Auckland University of Technology, New Zealand. She has published at Journal of Monetary Economics, International Economic Review, Review of Economic Dynamics, etc. Her current work focuses on digital currency, Fintech, government venture capital and related IO topics. Her research is funded by National Natural Science Foundation of China (2 grants), Guanghua Thought Grant and others. Her honors include the "Excellent Paper" Award at the Annual Conference on International Finance (2025), Peking University Outstanding Class Advisor (2024), Second Prize of Teaching, alongside awards for Best Teaching Demonstration and Outstanding Course Design at the 21st Peking University Young Faculty Teaching Competition (2021), and the Dan Searle Fellowship in Economics (awarded by DonorsTrust, USA), among others.