Blockchain technology is poised to streamline trade settlement. We build a model of intermediated trading with flexible time-to-settlement, search frictions, and counterparty risk. Longer trade-to-settlement time increases counterparty risk exposure. However, since intermediaries have more time to match buyers and sellers, liquidity improves. With imperfect competition, intermediaries specialize in either high- or low-default risk contracts. In equilibrium, they are able to relax price Read more [...]