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The Influence of Digital Currency on Traditional Monetary Theory

Author:Hubi Date:2018-07-25 16:01:55

As an emerging financial form, digital currency has many influences on economic and social development. However, it has returned to the traditional financial theory category. How does its birth impact on the traditional theory of the past, and will the past theory still work?


First, the impact on the relationship between money supply and demand and structure.

Once the country officially issues the legal digital currency, it will certainly have an impact on the existing financial system. The blockchain is the first to be applied in the digital currency field. The core technology is to solve the transaction credit problem. Through time stamping and digital encryption technology, the transaction record can not be changed, it can be saved forever, and the one-to-one fair trade problem is realized. . In order to reduce the opportunity cost of holding the main currency and the auxiliary currency, when the digital currency accumulates to a certain amount, the holder usually realizes a considerable part of it and converts it into various more secure financial funds. From this perspective, the frequent exchanges between different currencies have made the boundaries between different currencies more and more ambiguous, and the goal of regulating the money supply as a monetary policy regulator has been weakened, bringing uncertainty to the regulation of monetary policy. influences.


Second, the impact on the theory of money demand.

According to Keynes, the people will hold a certain amount of cash for the purpose of trading and responding to emergencies in case of emergency. Nowadays, people prefer a variety of fixed-term Internet wealth management products, because they have a lot of bank interest rates during the same period. Even small amounts of change will be placed in various electronic such as Yu'ebao, Cash, Ant Financial. In the wallet, these financial management methods are fast and bind and cooperate with traditional banks. In this way, young people will not put their cash in the hands of the older generation, and all kinds of liquidity will become short-term financial savings. If the public generally regards digital currency as wealth management capital, then the real society needs in the future. The flow of money will be less and less. The so-called flow has evolved into a "dead money" that has shifted from one savings account to another.


Again, the impact of digital currency on currency circulation.

Digital currency is transmitted rapidly through the network, and the transaction speed and circulation efficiency are much faster than traditional currency transactions. Especially in the promotion of intelligent technology and cloud technology, many aspects of data calculation and data scripts are automatically programmed. This kind of quick payment method slowly shows everyone's consumption habits and holding motives, and may change the holding currency into current saving capital. Once the switching between digital currency and other wealth is more convenient, then the speed of money circulation It may no longer be a constant, and the velocity instability of the currency increases. This means that the traditional monetary theory theory means that the speed of money flow becomes less stable. Under the traditional monetary and financial system, people's consumption and payment habits will not change much in the short term, which means that the speed of money circulation will usually be relatively stable.


Finally, the impact on monetary policy and regulation.

Once the digital currency is rapidly circulating between the central bank's legal digital currency, the commercial bank's monetary system and the personal digital wallet. Traditional banks face the dilemma of income without intermediary services, neither interest income nor so-called fees. This will lower the interest rate level of the entire financial system and make the interest rate transmission mechanism of monetary policy smoother. Under this condition, the central bank will no longer need to issue so much money reserves as today, and the discount rate as a function of monetary policy will have more room for development. At the same time, due to the expansion of the currency multiplier, the scale of open market operations required to achieve a certain amount of money supply adjustment will decline, and the central bank's use of open market operations will be more targeted and flexible.