Monetary Policy, Monetary Areas, and Financial Development with Electronic Money
July 1, 2004
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Order a Print CopyDisclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary
Electronic money (e-money), as a network good, could become an important form of currency in the future. Such a development could affect monetary policy effectiveness. If an increased use of e-money substantially limits the demand for central bank reserves, this limitation would require changes in the central bank operational target and a closer coordination of monetary and fiscal policies. Also, the optimal size of monetary unions would be different. However, the current level of e-money use does not seem to pose a threat to the stability of the financial system. Thus, central banks can successfully implement the objectives of monetary policy.
Subject: Banking, Currencies, Digital currencies, Monetary base, Monetary unions
Keywords: credit card, debit card, demand schedule, e-money product, e-money system, financial system, legal tender, WP
Pages:
42
Volume:
2004
DOI:
Issue:
122
Series:
Working Paper No. 2004/122
Stock No:
WPIEA1222004
ISBN:
9781451854527
ISSN:
1018-5941
