The e-monetary theory
Open Access
- 7 May 2020
- journal article
- research article
- Published by Walter de Gruyter GmbH in Economics: The Open-Access, Open-Assessment E-Journal
Abstract
The author develops a dynamic model with two types of electronic money: reserves for transactions between bankers and zero-maturity deposits for transactions in the non-bank private sector. Using this model, he assesses the efficacy of unconventional monetary policy since the Great Recession. After quantitative easing, keeping the interest on reserves near zero too long might create deflation. The central bank can safely get out of the "low rate-cum-deflation" trap by "raising rate and raising money supply".Keywords
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