A framework for analyzing monetary policy in an economy with e-money / by Yu Zhu and Scott Hendry.: FB3-5/2019-1E-PDF
"This paper considers an economy where central-bank-issued fiat money competes with privately issued e-money. We study a policy-setting game between the central bank and the e-money issuer and find (1) the optimal monetary policy of the central bank depends on the policy of the private issuer and may deviate from the Friedman rule; (2) there may exist multiple equilibria; (3) when the economy approaches a cashless state, the central bank’s optimal policy improves the market power of the e-money issuer and can lead to a discrete decrease in welfare and a discrete increase in inflation; and (4) first best cannot be achieved. Central-bank-issued e-money leads to a simple optimal policy that achieves the first best"--Abstract.
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| Department/Agency | Bank of Canada. |
|---|---|
| Title | A framework for analyzing monetary policy in an economy with e-money / by Yu Zhu and Scott Hendry. |
| Series title | Bank of Canada staff working paper, 1701-9397 ; 2019-1 |
| Publication type | Series - View Master Record |
| Language | [English] |
| Format | Electronic |
| Electronic document | |
| Note(s) | "January 2019." Includes bibliographic references. Includes abstract in French. |
| Publishing information | Ottawa, Ontario : Bank of Canada, 2019. |
| Author / Contributor | Zhu, Yu, 1966- Hendry, Scott. |
| Description | ii, 54 p. |
| Catalogue number |
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| Subject terms | Monetary policy Electronic commerce |
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