scholarly journals Development of Electronic Money and Its Impact on the Central Bank Role and Monetary Policy

10.28945/3328 ◽  
2009 ◽  
Author(s):  
Mohamad Al-Laham ◽  
Haroon Al-Tarawneh ◽  
Najwan Abdallat
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Computer Network ◽  
Electronic Device ◽  
Fiscal Policies ◽  
Electronic Money ◽  
Primary Means ◽  
Implementation Of Monetary Policy ◽  
Bank Reserves ◽  
Network Good

In recent years there has been considerable interest in the development of electronic money schemes. Electronic money has the potential to take over from cash as the primary means of making small-value payments and could make such transactions easier and cheaper for both consumers and merchants. Electronic money is a record of the funds or "value" available to a consumer stored on an electronic device in his or her possession, either on a prepaid card or on a personal computer for use over a computer network such as the Internet. This paper argues that e-money, as a network good, could become an important form of currency in the future. Such a development would influence the effectiveness and implementation of monetary policy. If an increased use of e-money substantially limits demand for central bank reserves, it would require changes in the operational target of the central bank and a closer coordination of monetary and fiscal policies.

scholarly journals Demand for Central Bank Reserves and Monetary Policy Implementation Frameworks: The Case of the Eurosystem

2021 ◽  
Author(s):  
Pontus Åberg ◽  
Marco Corsi ◽  
Vincent Grossmann-Wirth ◽  
Tom Hudepohl ◽  
Yvo Mudde ◽  
...  
Keyword(s):  
Monetary Policy ◽  
Policy Implementation ◽  
Central Bank ◽  
Bank Reserves

scholarly journals A Central Banks Role In Cashless Payments

2012 ◽  
Vol 11 (7) ◽  
pp. 827
Author(s):  
Tobias Duemmler ◽  
Stephan Kienle
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Economies Of Scale ◽  
Optimal Solution ◽  
Central Banks ◽  
Welfare Effects ◽  
Payment Systems ◽  
Systemic Risks ◽  
Implementation Of Monetary Policy

The smooth functioning of payment systems is relevant for both the efficiency of the financial sector as well as the implementation of monetary policy operations. Therefore, payment systems are often provided by central banks. The characteristics of individual payment systems, such as increasing economies of scale, favour the development of a monopolistic situation. Therefore, we consider the role of a central bank acting as a monopolist and discuss possible welfare effects. Against the background of huge systemic risks, a central bank acting as an operator of an individual payment system is supposed to be the optimal solution. We illustrate our findings in the light of the role of the Bundesbank which has traditionally been operating its own payment systems.

On the Role of Monetary and Fiscal Policies in Russia at the Crisis and Post-crisis periods

2010 ◽  
pp. 17-32 ◽  
Author(s):  
V. Manevich
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Commercial Banks ◽  
Budget Deficit ◽  
Acute Stage ◽  
Fiscal Policies ◽  
Exchange Market ◽  
Capital Export ◽  
Banking Credit

In the paper the author examines the monetary policy, which was carried out at the acute stage of the crisis and during the years 2009-2010, as well as the forecasts of monetary and fiscal policies for 2011-2013. The author comes to the conclusion that decreasing banking credit activity during the 2nd-4th quarters of 2009 and the 1st quarter of 2010 was due to reduced lending of commercial banks by the Central Bank and the reversion of its monetary policy to floppy following the situation on the exchange market. According to the authors calculations the budget deficit financed by domestic lending may grow to 6-7% of GDP provided that capital export be limited, and the money supply expand mainly on the basis of increases in the net domestic assets.

scholarly journals MONETARY POLICY IMPLEMENTATION FRAMEWORKS: A COMPARATIVE ANALYSIS

2010 ◽  
Vol 15 (S1) ◽  
pp. 145-189 ◽  
Author(s):  
Antoine Martin ◽  
Cyril Monnet
Keyword(s):  
Monetary Policy ◽  
Comparative Analysis ◽  
Policy Implementation ◽  
Central Bank ◽  
Open Market ◽  
Implementation Framework ◽  
Friedman Rule ◽  
Excess Reserves ◽  
Implementation Of Monetary Policy

We compare two stylized frameworks for the implementation of monetary policy. The first framework relies only on standing facilities, whereas the second framework relies only on open-market operations. We show that the Friedman rule cannot be implemented when the central bank uses standing facilities only. For a given rate of inflation, we show that standing facilities unambiguously achieve higher welfare than just conducting open-market operations. We conclude that elements of both frameworks should be combined. Also, our results suggest that any monetary policy implementation framework should remunerate both required and excess reserves.

Monetary Policy

2021 ◽  
pp. 185-224
Author(s):  
Juan Antonio Morales ◽  
Paul Reding
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Commodity Price ◽  
Fiscal Policies ◽  
External Shocks ◽  
Output Stabilization ◽  
Fiscal Dominance ◽  
Price Hike ◽  
The Government ◽  
Flexible Exchange Rates

The chapter explores two significant challenges faced by central banks in LFDCs: fiscal dominance and external shocks. Monetary policy can be dominated by governments that rely on seigniorage generated by the central bank or impose other constraints to facilitate the financing of persistent deficits. The chapter discusses and illustrates for several countries the concept of seigniorage, examines the mechanisms of fiscal dominance, and assesses its consequences. External oil and food price shocks also raise several monetary policy challenges. Using a theoretical approach, the chapter explores the trade-off between price and output stabilization that the central bank faces after a commodity price hike. The analysis takes into account whether the country is a net exporter or a net importer and whether it is on fixed or on flexible exchange rates. It also discusses coordination issues between monetary and fiscal policies, in particular when windfall gains accrue to the government.

scholarly journals Strategic deviations in optimal monetary policy

2021 ◽  
Vol 157 (1) ◽  
Author(s):  
Fabio Canetg
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Research Question ◽  
Dynamic Stochastic General Equilibrium ◽  
Time Inconsistency ◽  
New Keynesian ◽  
Optimal Monetary Policy ◽  
Current Period ◽  
Dynamic Stochastic ◽  
Implementation Of Monetary Policy

AbstractThis paper investigates the circumstances under which a central bank is more or less likely to deviate from the optimal monetary policy rule. The research question is addressed in a simple New Keynesian dynamic stochastic general equilibrium (DSGE) model in which monetary policy deviations occur endogenously. The model solution suggests that higher future central bank credibility attenuates the current period policy trade-off between a stable inflation rate and a stable output gap. Together with the loss of credibility after a policy deviation, this provides the central bank with an incentive to implement past policy commitments. The result is valid even if the central bank may recover credibility with some probability after a policy deviation. My main finding is that the central bank is willing to implement past policy commitments if a sufficient fraction of agents is not aware of the exact end date of the policy commitment. The result challenges the time-inconsistency argument against monetary policy commitments and provides a potential explanation for the repeated implementation of monetary policy commitments in reality.

ON THE MACROECONOMIC AND WEALTH EFFECTS OF UNCONVENTIONAL MONETARY POLICY

2016 ◽  
Vol 21 (5) ◽  
pp. 1189-1204 ◽  
Author(s):  
Fredj Jawadi ◽  
Ricardo M. Sousa ◽  
Raffaella Traverso
Keyword(s):  
Growth Rate ◽  
Monetary Policy ◽  
Central Bank ◽  
Stock Prices ◽  
Asset Prices ◽  
Housing Prices ◽  
Wealth Effects ◽  
Unconventional Monetary Policy ◽  
Substantial Impact ◽  
Bank Reserves

This paper focuses on the macroeconomic and wealth effects of unconventional monetary policy. To this end, we estimate a Bayesian structural vector autoregression (B-SVAR) using U.S. monthly data for the post-Lehman Brothers' collapse period. We show that a positive shock to the growth rate of central bank reserves does not have a substantial impact on industrial production or consumer prices. However, it also gives a strong boost to asset prices, which is larger in magnitude for stock prices than for housing prices. Thus, unconventional monetary policy typically operates via portfolio-rebalancing effects. A VAR counterfactual exercise confirms the role of the shocks to the growth rate of central bank reserves in explaining the dynamics of the variables included in the system, especially in the case of asset prices. Finally, additional empirical assessments uncover an important change in the conduct of monetary policy from “standard” to “exceptional” times and the suitability of our model to capture such a structural transformation.

scholarly journals Interest on reserves, helicopter money and new monetary policy

PLoS ONE ◽  
2021 ◽  
Vol 16 (7) ◽  
pp. e0253956
Author(s):  
Duong Ngotran
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Central Bank ◽  
Money Supply ◽  
Taylor Rule ◽  
Policy Framework ◽  
Nonlinear Dynamic Model ◽  
Demand Deposits ◽  
Currency Demand ◽  
Bank Reserves

We build a nonlinear dynamic model with currency, demand deposits and bank reserves. Monetary base is controlled by central bank, while money supply is determined by the interactions between central bank, commercial banks and public. In economic crises when banks cut loans, monetary policy following a Taylor rule is not efficient. Negative interest on reserves or forward guidance is effective, but deflation is still likely to be persistent. If central bank simultaneously targets both interest rate and money supply by a Taylor rule and a Friedman’s k-percent rule, inflation and output are stabilized. An interest rate rule policy is just a subset of a more general monetary policy framework in which central bank can move interest rate and money supply in every direction.

scholarly journals Development of Electronic Money and Its Impact on the Central Bank Role and Monetary Policy

10.28945/1063 ◽  
2009 ◽  
Vol 6 ◽  
pp. 339-349 ◽  
Author(s):  
Mohamad Al-Laham ◽  
Haroon Al-Tarwneh ◽  
Najwan Abdallat
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Electronic Money
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