{
  "title": "Monetary Policy with Negative Interest Rates: Decoupling Cash from Electronic Money",
  "publication": "IMF Working Papers, August 27, 2018",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2018/08/27/monetary-policy-with-negative-interest-rates-decoupling-cash-from-electronic-money-46076",
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  "summary": "Monetary policy space remains constrained by the lower bound in many countries, limiting the policy options available to address future deflationary shocks. The existence of cash prevents central banks from cutting interest rates much below zero.",
  "sections": [
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      "heading": "Summary",
      "content": "- Monetary policy space remains constrained by the lower bound in many countries, limiting the policy options available to address future deflationary shocks.\n- The existence of cash prevents central banks from cutting interest rates much below zero.\n- The paper considers the practical feasibility of recent proposals for decoupling cash from electronic money to achieve a negative yield on cash which would remove the lower bound constraint on monetary policy.\n- The paper discusses how central banks could design and operate such a system, and raises some unanswered questions."
    },
    {
      "heading": "Authors and Publication",
      "content": "- By Katrin Assenmacher, Signe Krogstrup\n- August 27, 2018\n- IMF Working Papers, Working Paper No. 2018/191"
    },
    {
      "heading": "Key themes and analysis",
      "content": "- Constraint on monetary policy:\n  - Lower bound limits policy options to respond to deflationary shocks.\n  - Cash circulation is identified as the mechanism preventing central banks from cutting interest rates much below zero.\n- Proposal considered:\n  - Decoupling cash from electronic money to impose a negative yield on cash, thereby removing the zero lower bound constraint.\n- Design and operational considerations:\n  - The paper discusses how central banks could design and operate a system that decouples cash from electronic money (details of specific design elements and operational steps are addressed in the paper).\n- Open questions:\n  - The paper raises several unanswered questions about feasibility, design, and implementation that would require further research and policy discussion."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subject: Banking, Central bank policy rate, Currencies, Digital currencies, Financial services, Monetary policy, Money, Negative interest rates, Technology, Zero lower bound\n- Keywords: cash amount, cash payment, cash price, cash yield, Central bank policy rate, Currencies, currency system, De-bundling cash, Digital currencies, Dual local currency regime, Global, handling company, Legal tender, Monetary policy framework, Negative interest rates, unit of account, WP, Zero lower bound\n\n---\n\n Content in this bundle\n\n- wp18191\n  - wp18191 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp18191 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2018/08/27/monetary-policy-with-negative-interest-rates-decoupling-cash-from-electronic-money-46076"
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    "Authors: Katrin Assenmacher, Signe Krogstrup",
    "Published: August 27, 2018",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484370025.001",
    "Monetary policy space remains constrained by the lower bound in many countries, limiting the policy options available to address future deflationary shocks.",
    "The existence of cash prevents central banks from cutting interest rates much below zero.",
    "The paper considers the practical feasibility of recent proposals for decoupling cash from electronic money to achieve a negative yield on cash which would remove the lower bound constraint on monetary policy.",
    "The paper discusses how central banks could design and operate such a system, and raises some unanswered questions.",
    "By Katrin Assenmacher, Signe Krogstrup",
    "August 27, 2018",
    "IMF Working Papers, Working Paper No. 2018/191",
    "Constraint on monetary policy:",
    "Proposal considered:",
    "Design and operational considerations:",
    "Open questions:",
    "Subject: Banking, Central bank policy rate, Currencies, Digital currencies, Financial services, Monetary policy, Money, Negative interest rates, Technology, Zero lower bound",
    "Keywords: cash amount, cash payment, cash price, cash yield, Central bank policy rate, Currencies, currency system, De-bundling cash, Digital currencies, Dual local currency regime, Global, handling company, Legal tender, Monetary policy framework, Negative interest rates, unit of account, WP, Zero lower bound",
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