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Ruchir Agarwal and Miles Kimball on Electronic Money and Inflation

April 13, 2022

Moving to an electronic money standard would allow central banks to move rates quickly in both directions. (iStock by Getty Images/ Jay Yuno)

Most people and virtually all businesses now use electronic money for their transactions, yet central banks are still dealing with what's known among economists as the paper currency problem, which limits central banks' ability to use deep negative rates to fight recessions. In this second episode of a two-part series on inflation, economists Miles Kimball and Ruchir Agarwal discuss how fully committing to an electronic money standard would allow central banks to break the zero lower bound associated with paper currency and help them to fight both inflation and recessions more effectively, including by lowering the inflation target. Transcript

This podcast series is based on their inflation trilogy published in Finance and Development.

Miles Kimball is a professor at the University of Colorado, Boulder, and Ruchir Agarwal is a senior economist in the IMF Research Department.