erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

 

Electronic Money, Its Implicatiýons for Central Banks and Monetary Policy, and the Case in Turkey

Mehmet Günal (CBRT)

Abstract  

In parallel to financial innovation and technological changes, electronic payment systems have been used in many countries for a few years. More recently, discussions on electronic money and electronic banking have become widespread among economists as well as central bankers, bankers and other interested people. Electronic money refers to the new ways of storing and transfering value arising out of the advances in microprocessor technology and the emergence of Internet. Use of electronic money (e-money) and of internet banking pose challenges for central bankers and other public authorities. The challenges to be faced by central banks and to be discussed in this paper are stability of financial system, security and authentication of e-money, loss of seniorage revenues, effets on demand for monetary aggregates and on operation of monetary policy, regulatory and supervisory responsibilities, and financial risks borne by issuers of electronic money, as well as risks to privacy, fraud, tax evasion and money laundering. Within this context, the paper analyses the development of e-money and its implications for central banks and monetary policy, reviews the pilot applications and measures taken in the United States and the proposal for the Directive on Electronic Money in the European Union, draws attention to the case in Turkey, in which the Internet banking and electronic payments media have been growing very fast and which there is yet no concrete preparations on the issue, and makes suggestions on policy responses and measures to be taken to maintain the stability of financial system and hence to achieve sustained economic growth.

Economic Research Center
Middle East Technical University
06531 Ankara Turkey
Phone: + 90 312 210 3044, 210 2003
Fax: +90 312 210 1244
e-mail: metuerc@metu.edu.tr