Decoupling at the Margin: The Threat to Monetary Policy from the Electronic Revolution in Banking
AbstractThe threat to monetary policy from the electronic revolution in banking is the possibility of a decoupling' of the operations of the central bank from markets in which financial claims are created and transacted in ways that, at some operative margin, affect the decisions of households and firms on such matters as how much to spend (and on what), how much (and what) to produce, and what to pay or charge for ordinary goods and services. The object of this paper is to discuss how this possibility arises and what it implies, to dismiss as unessential to the argument various extreme characterizations that have arisen in the recent debate on this issue (for example, that no one will use money for ordinary economic transactions), and to address the specific arguments on the issue offered by Charles Goodhart, Charles Freedman and Michael Woodford.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7955.
Date of creation: Oct 2000
Date of revision:
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Find related papers by JEL classification:
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michael Woodford, 2000.
"Monetary Policy in a World Without Money,"
NBER Working Papers
7853, National Bureau of Economic Research, Inc.
- Friedman, Benjamin M, 1999. "The Future of Monetary Policy: The Central Bank as an Army with Only a Signal Corps?," International Finance, Wiley Blackwell, vol. 2(3), pages 321-38, November.
- Benjamin M. Friedman, 1999. "The Future of Monetary Policy: The Central Bank as an Army With Only a Signal Corps," NBER Working Papers 7420, National Bureau of Economic Research, Inc.
- Freedman, Charles, 2000. "Monetary Policy Implementation: Past, Present and Future--Will Electronic Money Lead to the Eventual Demise of Central Banking?," International Finance, Wiley Blackwell, vol. 3(2), pages 211-27, July.
- Charles Goodhart, 2000. "Can Central Banking Survive the IT Revolution?," FMG Special Papers sp125, Financial Markets Group.
- Daniel L. Thornton, 2008.
"Monetary policy: why money matters and interest rates don't,"
2008-011, Federal Reserve Bank of St. Louis.
- Daniel L. Thornton, 2012. "Monetary policy: why money matters, and interest rates don’t," Working Papers 2012-020, Federal Reserve Bank of St. Louis.
- C. Sardoni, 2006. "Why Central Banks (and Money) Rule the Roost," Economics Working Paper Archive wp_457, Levy Economics Institute, The.
- Daniel L. Thornton, 2006. "The daily liquidity effect," Working Papers 2006-020, Federal Reserve Bank of St. Louis.
- Cette, G. & Pfister, C., 2003.
"The Challenges of the "New Economy" for Monetary Policy,"
100, Banque de France.
- Gilbert Cette & Christian Pfister, 2003. "The challenges of the "new economy" for monetary policy," BIS Papers chapters, in: Bank for International Settlements (ed.), Monetary policy in a changing environment, volume 19, pages 213-233 Bank for International Settlements.
- Stephen G. Cecchetti, 2002. "The New Economy and the Challenges for Macroeconomic Policy," NBER Working Papers 8935, National Bureau of Economic Research, Inc.
- Bennett T. McCallum, 2004.
"Monetary Policy In Economies With Little Or No Money,"
Pacific Economic Review,
Wiley Blackwell, vol. 9(2), pages 81-92, 06.
- Bennett T. McCallum, 2003. "Monetary Policy in Economies with Little or No Money," NBER Working Papers 9838, National Bureau of Economic Research, Inc.
- Philip R. Lane, 2002.
"Monetary-Fiscal Interactions in an Uncertain World: Lessons for European Policymakers,"
Trinity Economics Papers
200213, Trinity College Dublin, Department of Economics.
- Lane, P.R., 2002. "Monetary-Fiscal Interactions in an Uncertain World: Lessons for European Policymakers," CEG Working Papers 20027, Trinity College Dublin, Department of Economics.
- Bank for International Settlements, 2013. "Central bank finances," BIS Papers, Bank for International Settlements, number 71, 3.
- Helmut Wagner, 2001. "Implications of Globalization for Monetary Policy," IMF Working Papers 01/184, International Monetary Fund.
- Jan Marc Berk, 2002.
"New Economy, Old Central Banks?,"
Tinbergen Institute Discussion Papers
02-087/2, Tinbergen Institute, revised 01 Aug 2002.
- Kotsemir, Maxim & Abroskin, Alexander, 2013.
"Innovation Concepts and Typology – An Evolutionary Discussion,"
45069, University Library of Munich, Germany.
- Maxim Kotsemir & Alexander Abroskin & Dirk Meissner, 2013. "Innovation concepts and typology – an evolutionary discussion," HSE Working papers WP BRP 05/STI/2013, National Research University Higher School of Economics.
- Jan Marc Berk, 2002. "Banca centrale e innovazione finanziaria. Una rassegna della letteratura recente," Moneta e Credito, Economia civile, vol. 55(220), pages 345-385.
- José Manuel Gutiérrez, 2008. "A Frictionless Economy With Subotimizing Agents," Vienna Economics Papers 0811, University of Vienna, Department of Economics.
- Jan Marc Berk, 2002. "Central banking and financial innovation. A survey of the modern literature," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 55(222), pages 263-297.
- Hasan Cömert, 2012. "Decoupling between the Federal Funds Rate and Long-term Interest Rates: Decreasing Effectiveness of Monetary Policy in the U.S," Working Papers wp295, Political Economy Research Institute, University of Massachusetts at Amherst.
- Marco Arnone & Luca Bandiera, 2004. "Monetary Policy, Monetary Areas, and Financial Development with Electronic Money," IMF Working Papers 04/122, International Monetary Fund.
- Jan Marc Berk, 2002. "Central banking and financial innovation. A survey of the modern literature," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 55(222), pages 263-297.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.