Monetary Dialogue: Financial innovation and monetary policy: Challenges and prospects

Project description:

New financial technologies are reshaping the financial sector to an extent that has not been experienced in the past. Electronic money, digital banking, crowd funding platforms, or distributed ledger technology are calling into question the role played by banks in financing the economy.

Central banks are facing the challenge of preserving financial stability, without discouraging innovation. Technological changes also require a review of monetary policy transmission methods. Indicatively, FinTech data applications raise new issues for the measurement of monetary aggregates, since an increasing portion of financial transactions are counted outside established banks. In sum, central banks must reconsider their practices so as to safeguard the efficiency of monetary policy.  

The main objectives of the project are:

• to review recent developments in financial innovation
• to discuss the potential challenges for euro area monetary policy stemming from financial innovation and a changing financial environment.

Outcome: Potential impact of financial innovation on monetary policy by Marek Dabrowski

Sponsor: European Parliament