To Imagine the Future of Digital Currencies – Dr. Yang YOU

To Imagine the Future of Digital Currencies – Dr. Yang YOU

Fascinated by the unpredictable financial world, Dr. Yang YOU seeks to give form to intangible phenomena with scientific methodologies. Devoted to spend his lifetime probing at the frontiers of human knowledge, Dr. You has officially joined us in July 2021 as an Assistant Professor in Finance.

The determination of a knowledge explorer 

“The financial world itself a very unique universe with an unlimited collection of stars to explore, and many of them are interwoven with the destinies of many. The ever rising property price and the unpredictability of the stock markets for examples, have urged policy makers to fathom new strategies. But in the meantime, private entities will also come up with their countermeasures to adapt. The tensions and dynamics between different stakeholders are really intriguing. This has encouraged me to explore how these policy changes can affect culture and institutions,” said Dr. You. But instead of becoming a politician or civil servant, academia is where his heart belonged to. He jokingly said, “Scholars don’t need to publish findings for money. We are free to imagine the future society and think about different possibilities. Scholars are literally thought leaders.”

Prior to joining HKU, Dr. You worked for a quantitative proprietary trading fund and acted as a digital currency consultant for Facebook. When asked whether this experience has swayed his dream of becoming a scholar, he firmly replied with a “No.” He said, “As a quant trader, I got to know how trading algorithms are written and executed, and the caveats of different trading strategies. However, practitioners seldomly invest in understanding ‘why’ or develop theories to reconcile these empirical findings. So I think I should move on and pursue what I am interested the most.”

As a scholar aspired to conquer unknown knowledge, crypto currencies’ unpredictability, volatility, and disruptive nature has deeply gravitated his intellectual interests. Will this new kid on the block overthrow the USD hegemony? Will all the obstacles in cross-border trades be removed ever since? Now, with unlimited time at his disposal, Dr. You is ready to let his financial knowledge goes wild. One of his latest research, for example, has touched on the unthinkable – will platform companies be the vanguard of mainstream digital currencies.

Imagining a future where platform companies are central banks

Digital vouchers and shopping scores are no strangers to us ordinary consumers. We have been using this kind of digital currency to purchase goods and services from exclusive firms from time to time. But have you ever wondered, that these exclusive digital moneys will one day earn the equal status of legal tender notes?

By designing a tractable model of redeemable platform tokens that allows one to explore a number of issues related to their design, features, and supply policy, Dr. You and his research team discover that unless the tokens can generate a considerable convenience yield to consumers, platform companies are unlikely to create digital tokens that can be tradable beyond the platform. Dr. You explained that “We have conducted a myriad of tests, and we discovered that it is simply not worth it. Even though platform companies like Alibaba and Amazon are rich as nations, maintaining the tradability of a platform currency entails huge issuance costs and pricing constraints, which really hurts their profits.” The novelty of this research and the uniqueness of the model have impressed many in academia. Dr. You is delighted to share with us that his paper is currently under review by the internationally renowned Review of Economic Studies.

The promising land for multidisciplinary research

Even though Dr. You is a scholar in finance, his research has deep macroeconomics implications. Dr. You commented that HKU Business School is the best place for multidisciplinary research among all academic institutions in Asia. He said, “During my interview, the Area Head of Finance, Professor Tse Chun Lin, encouraged me to explore research topics other than finance. I can feel that the School has put the development of young scholars on a very high priority, and I really look forward to working with such open-minded individuals.”

Dr. You will be teaching in the Master of Finance and Master of Finance in Financial Technology in this academic year. With Hong Kong being an international financial centre, Dr. You believes that his students are aspired to work in high-end financial institutions. While he urges them to work hard, Dr. You will also push himself to understand the expectations of local employers’ and the market dynamics of Hong Kong.

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