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The E-Money Revolution: Challenges and Implications for Monetary Policy

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  • Thomas I. Palley

Abstract

The e-revolution promises to introduce new e-monies that may ultimately displace existing money. E-money poses a challenge to central banks’ ability to control interest rates, and it may also increase endogenous financial instability. The challenge to interest rate control stems from the possibility that e-money may diminish the financial system’s demand for central bank liabilities, rendering central banks unable to conduct meaningful open market operations. Increasedfinancial instability could emerge from the increased elasticity of private money production, and from periodic runs out of e-money into central bank money that generate liquidity crises.

Suggested Citation

  • Thomas I. Palley, 2001. "The E-Money Revolution: Challenges and Implications for Monetary Policy," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 24(2), pages 217-233, December.
    • Handle: RePEc:mes:postke:v:24:y:2001:i:2:p:217-233
    DOI: 10.1080/01603477.2001.11490324
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    References listed on IDEAS

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    1. L. Randall Wray, 1998. "Understanding Modern Money," Books, Edward Elgar Publishing, number 1668.
    2. Ronnie Phillips, 1992. "The 'Chicago Plan' and New Deal Banking Reform," Economics Working Paper Archive wp_76, Levy Economics Institute.
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    Cited by:

    1. Olajide, Victor C., 2012. "Cashless banking in Nigeria and its implications," MPRA Paper 38096, University Library of Munich, Germany.
    2. Haydar Akyazi & Seyfettin Artan, 2006. "Reflections of the New Economy on the Monetary Policy and Central Banking," Papers of the Annual IUE-SUNY Cortland Conference in Economics, in: Oguz Esen & Ayla Ogus (ed.), Proceedings of the Conference on Human and Economic Resources, pages 373-387, Izmir University of Economics.
    3. Xiaohui Zhang & Zhihong Ji & Yong Cui, 2009. "Reserve requirement, reserve requirement tax and money control in China: 1984–2007," Frontiers of Economics in China, Springer;Higher Education Press, vol. 4(3), pages 361-383, September.

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