No land 3 Mining
Publish: 2021-05-23 04:55:32
1. E-money and its impact on the central bank and monetary policy
the widespread use of e-money has triggered a variety of studies on the impact of this new form of money on the central bank's ability to control money supply. Many economists believe that e-money will completely replace cash, while others believe that its impact is less dramatic. The ability to control money supply depends on the definition of M1 money. M1 currently includes cash, traveler's checks and demand deposits. If the use of these items is reced e to the increasing dependence on e-money, M1 will not be able to be used as an accurate monetary measurement in the economy. The rection of the ability to measure the total amount of money will limit the ability of the central bank to carry out open market operations and locate the money supply. This will be compensated by the fact that "the new digital currency is fully supported by assets such as gold or high-quality financial instruments, so the demand for open market operations will decrease, because the money supply of transactions must automatically adjust to the demand" (Ryan, 2000). Assuming that the money supply is fixed, "when the cash weight slowly decreases with the increase of the use of e-money, the scale of assets and liabilities of the central bank will decrease, which will lead to the weakening of money management ability and interest rate management ability through open market operation." Tucker, 2002)
the widespread use of e-money has triggered a variety of studies on the impact of this new form of money on the central bank's ability to control money supply. Many economists believe that e-money will completely replace cash, while others believe that its impact is less dramatic. The ability to control money supply depends on the definition of M1 money. M1 currently includes cash, traveler's checks and demand deposits. If the use of these items is reced e to the increasing dependence on e-money, M1 will not be able to be used as an accurate monetary measurement in the economy. The rection of the ability to measure the total amount of money will limit the ability of the central bank to carry out open market operations and locate the money supply. This will be compensated by the fact that "the new digital currency is fully supported by assets such as gold or high-quality financial instruments, so the demand for open market operations will decrease, because the money supply of transactions must automatically adjust to the demand" (Ryan, 2000). Assuming that the money supply is fixed, "when the cash weight slowly decreases with the increase of the use of e-money, the scale of assets and liabilities of the central bank will decrease, which will lead to the weakening of money management ability and interest rate management ability through open market operation." Tucker, 2002)
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