The rapid spread of the internet and some aspects of e-finance are changing the financial system in ways that are hard to predict. This has potential ramifications for monetary policy all through the process of its operation. Effects may be felt on the central bank’s ability to operate monetary policy, the connection between interest rates it controls and key market rates, how these rates affect the real economy and inflation, and the feedback from real economy data to policy setting. This paper discusses these effects in turn. Many of them will probably only be manifest in the medium- to longterm but given the rapid development of the internet some could occur surprisingly soon.
|Publisher||Bank for International Settlements|