Development of Electronic Money and the Effectiveness of Japanese Monetary Policy

Japan has a sophisticated financial payment system.Therefore,the recent Japanese e-money boom and its effects on the effectiveness of Japanese monetary policy are worthy of scrutiny.Bank of Japan annouced its e-money supply and other money stock data for the fiscal years of 2007 and 2008 according to the definition given by the Basel Committee.This allows the study to test whether the developments of e-money have significantly influenced Japan's monetary policy.To put it another way,does the substitution effect of e-money affect the money multipliers? The findings help to clarify the question of whether Bank of Japan's conclusion on the e-money survey guide to a more effective monetary policy in the e-money context.