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Monetary Policy, Monetary Areas, and Financial Development with Electronic Money

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  • Marco Arnone
  • Luca Bandiera

Abstract

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.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/122.

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Length: 42
Date of creation: 01 Jul 2004
Date of revision:
Handle: RePEc:imf:imfwpa:04/122

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Keywords: Monetary operations; central bank; monetary policy; credit; reserve requirements; payments; payment systems; monetary union; monetary unions; monetary areas; monetary system; monetary systems; prices; collateral; money supply; monetary fund; monetary area; seigniorage; purchases; monetary control; monetary aggregates; inflation; aggregate demand; substitution; transmission of monetary policy; systemic risk; open market operations; credit cards; clearinghouses; queuing; monetary authority; monetary economics; international monetary arrangements; monetary policy decisions; cash cards; payment system; monetary arrangements; monetary policies; reserve requirement; counterpart; rtgs; monetary value; monetary base; monetary policy implementation; tight monetary policy; government securities;

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References

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  1. Shy, Oz & Tarkka, Juha, 1998. "The Market for Electronic Cash Cards," Research Discussion Papers, Bank of Finland 21/1998, Bank of Finland.
  2. Michael Kurth, 1985. "Review," Public Choice, Springer, Springer, vol. 45(2), pages 223-224, January.
  3. Woodford, Michael, 1997. "Doing Without Money: Controlling Inflation in a Post-Monetary World," Seminar Papers, Stockholm University, Institute for International Economic Studies 632, Stockholm University, Institute for International Economic Studies.
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  6. Benjamin M. Friedman, 2000. "Decoupling at the Margin: The Threat to Monetary Policy from the Electronic Revolution in Banking," NBER Working Papers 7955, National Bureau of Economic Research, Inc.
  7. Friedman, Benjamin M, 2000. "Decoupling at the Margin: The Threat to Monetary Policy from the Electronic Revolution in Banking," International Finance, Wiley Blackwell, Wiley Blackwell, vol. 3(2), pages 261-72, July.
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Cited by:
  1. Akyazi, Haydar & Artan, Seyfettin, 2006. "Reflections of the New Economy on the monetary policy and central banking," MPRA Paper 152, University Library of Munich, Germany.
  2. Haydar, Akyazi & Seyfettin, Artan, 2006. "The reflections of new economy on monetary policy and central banking," MPRA Paper 603, University Library of Munich, Germany, revised 27 Sep 2006.
  3. Pomfret, Richard, 2005. "Sequencing trade and monetary integration: issues and application to Asia," Journal of Asian Economics, Elsevier, Elsevier, vol. 16(1), pages 105-124, February.

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