Research On The Development Of Electronic Money And The Impaction On Money Supply

In the long history of monetary development, its shape has gone through thestages of development by the physical currency to the metallic currency, and then thepaper currency. By the arrival of the information revolution on twentieth century, itbrought new payment instruments for people--electronic money, which made greatchanges to the trading behavior and lifestyle. It not only effectively reduce the cost ofcommodity trading information, but also increase the flexibility,that the timing andspace of the transaction options. The rapid development of science and technology,continually stimulate people to put forward higher requirements on the means ofpayment and transactions--efficient, convenient, flexible and low-cost. In this context,a wide range and different purposes of electronic money, applicated the popularity ofe-commerce by rapid development. Looking at the world, the future of electronicmoney is bound to replace the traditional currency when conditions are ripe. Rightnow,It makes major challenges to our traditional money supply mechanism, thecentral bank’s position, as well as the implementation of monetary policy.Starting with giving a strict definition to the electronic money, then outlined andsummarized the characteristics and under different conditions of classification ofelectronic money. As a highlight of this writing, separated it from the “electronicinstruments of payment”,”e-purse”,”virtual currency”.After an overview of the theoryof electronic money, typical through access to large amounts of data and information,supplemented by a number of pictures and tables,made a introduction of the typicalproducts of the contemporary electronic money and the state of development at homeand abroad, and outlines the problems of China’s current development of electronicmoney. It then discusses the emergence of electronic money, how will China’smonetary hierarchy, the two components of base money, and the money multiplierwould be affected. This paper argues that the emergence of electronic money areblurred monetary level division; gradually reducing the base currency; increasing money multiplier in the short term,while difficult to predict in the long-term.So it’shard to tell the final effect on the total money supply.On this premise, this paper thenconsiders the impaction of electronic money on Seigniorag and money supply. Finally,based on the previous paper summarizes the development of electronic money, as wellas the impact of money supply analysis. This paper made policy recommendationsfrom two major aspects of development of electronic money: First, from theadjustment of the central bank’s monetary policy objectives and tools, etc;second,proposed regulatory levels from the sound of electronic money legal, financial andinstitution building, accelerate the innovation of electronic money, improve theenvironment to promote the sound development of China’s electronic money.