Monetary Policy in a World Without Money

Michael Woodford

NBER Working Paper No. 7853
Issued in August 2000
NBER Program(s):Economic Fluctuations and Growth, Monetary Economics

This paper considers whether the development of electronic money' poses any threat to the ability of central banks to control the value of their national currencies through conventional monetary policy. It argues that even if the demand for base money for use in facilitating transactions is largely or even completely eliminated, monetary policy should continue to be effective. Macroeconomic stabilization depends only upon the ability of central banks to control a short-term nominal interest rate, and this would continue to be possible, in particular through the use of a channel' system for the implementation of policy, like those currently used in Canada, Australia and New Zealand.

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Document Object Identifier (DOI): 10.3386/w7853

Published: Woodford, Michael. "Monetary Policy In A World Without Money," International Finance, 2000, v3(2), 229-260. citation courtesy of

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