Study On The Impact Of Electronic Money Upon China’s Monetary Supply

With the rapid development of electronic information and Internet technology,the form of money is evolving gradually.Electronic money is the product of the Information Age.The emergence and development of digital money not only changed the currency forms and payment methods,but also posed a challenge to the traditional monetary creation theory and monetary control policy.Compared with the traditional currency,this kind of money not only circulates much more conveniently,faster and has lower cost,but also can be exchanged anytime and anywhere.So it got fast development,the form and size are continuously innovating,the affect on the monetary system and currency regulation is increasingly significant.Therefore,there are realistic meanings to research the rule of development of electronic money and the impact on the money supply,which can help the monetary authorities develop reasonable monetary policies and prevent financial risks.In recent years,theorists and practice experts research around the electronic money,which is very common.But,the definition about electronic money used in different studies varies,so the analysis methods and conclusions may be different.In this paper,starting from the definition of electronic money.First of all,define the range of electronic money,introduce the development environment of electronic money both at home and abroad.Then,based on the theory of modern money supply,introduce the electronic money to in money supply theoretical model to study the impact of electronic money on strata of money supply,the monetary base and the money multiplier,and then a comprehensive analysis of its impact on the money supply.The study found that the emergence of E-Money blurred the boundaries between the various stratum of the currency,changed the structure of the monetary base,increased the endogenous money multiplier.E-Money only has affected monetary base structure,the quantity of base money still is controlled by the central bank,so the electronic money affected the total money supply through monetary multiplier.Finally,empirical part focused on the impact of electronic money on monetary multiplier,utilizing the latest and available datum,analyzing long-term equilibrium relationship between variables through Cointegration Test,analyzing the short-term impact of electronic money on monetary multiplier through Error Correction Model,this part provides empirical support for analyzing electronic currency impact on money supply.The empirical results show that there are differences influence on narrow money and broad money:there is a negative correlation between electronic money and narrow monetary multiplier,and a positive correlation between electronic money and broad monetary multiplier,which is mainly due to electronic money has a positive effect on deposits ratio,however deposits ratio has different impacts on broad money and narrow money multiplier.The influence of electronic currency on the money supply has affected the monetary authorities policy effectiveness,when the monetary authorities sets monetary policy,they need to take into account the impact of electronic money.This paper puts forward the corresponding policy recommendations from the aspects of monetary policy intermediary target and the electronic currency regulation issue.