{
  "title": "Monetary Policy, Monetary Areas, and Financial Development with Electronic Money",
  "publication": "IMF Working Papers, July 1, 2004",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/monetary-policy-monetary-areas-and-financial-development-with-electronic-money-17415",
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  "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.",
  "sections": [
    {
      "heading": "Overview and key findings",
      "content": "- Electronic money (e-money), characterized as a network good, could become an important form of currency in the future.\n- Increased use of e-money could affect monetary policy effectiveness.\n- If an increased use of e-money substantially limits the demand for central bank reserves, this limitation would require:\n  - changes in the central bank operational target, and\n  - a closer coordination of monetary and fiscal policies.\n- The optimal size of monetary unions would be different under substantial e-money adoption.\n- At the current level of e-money use, there does not seem to be a threat to the stability of the financial system.\n- Conclusion: central banks can successfully implement the objectives of monetary policy given current e-money usage."
    },
    {
      "heading": "Policy implications and recommended adjustments",
      "content": "- Monitor e-money adoption as a potential driver of reserve demand reduction.\n- Prepare contingency frameworks to:\n  - revise central bank operational targets if reserve demand falls substantially, and\n  - strengthen coordination mechanisms between monetary and fiscal authorities.\n- Re-evaluate monetary-union design parameters (optimal size) in light of possible widespread e-money adoption."
    },
    {
      "heading": "Analytical themes and scope",
      "content": "- Focus on interactions among:\n  - monetary policy effectiveness,\n  - monetary-area (monetary union) optimal size, and\n  - financial development with electronic money.\n- E-money treated in the analysis as a network-good phenomenon influencing currency form and demand for central bank liabilities.\n\n---\n\n Content in this bundle\n\n- wp04122\n  - wp04122 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp04122 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/monetary-policy-monetary-areas-and-financial-development-with-electronic-money-17415"
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    "Authors: Marco Arnone, Luca Bandiera",
    "Published: July 1, 2004",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451854527.001",
    "Electronic money (e-money), characterized as a network good, could become an important form of currency in the future.",
    "Increased use of e-money could affect monetary policy effectiveness.",
    "If an increased use of e-money substantially limits the demand for central bank reserves, this limitation would require:",
    "The optimal size of monetary unions would be different under substantial e-money adoption.",
    "At the current level of e-money use, there does not seem to be a threat to the stability of the financial system.",
    "Conclusion: central banks can successfully implement the objectives of monetary policy given current e-money usage.",
    "Monitor e-money adoption as a potential driver of reserve demand reduction.",
    "Prepare contingency frameworks to:",
    "Re-evaluate monetary-union design parameters (optimal size) in light of possible widespread e-money adoption.",
    "Focus on interactions among:",
    "E-money treated in the analysis as a network-good phenomenon influencing currency form and demand for central bank liabilities.",
    "**_wp04122**"
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