The Payment System and Monetary Policy

Omotunde Johnson

No 1998/004, IMF Policy Discussion Papers from International Monetary Fund

Abstract: Achieving the primary objective of price stability without unduly compromising the operational efficiency of the payment system constitutes a major problem for central banks. Routine monetary policy presumes a given institutional and technological framework, including aspects of the payment system. Such a monetary policy concerns itself with intraday and interday credit for payments settlements and with float. Liquidity shocks and panics sometimes pose an additional challenge. In recent years, major and rapid institutional and technological changes in the payment system (mainly to lower risks and augment operational efficiency) have affected the monetary policy decision-making process, particularly in the short run.

Keywords: PDP; central bank; payment system; monetary policy; payment; market; credit facilities; market operation; A. central bank credit Policy; money multiplier; payment settlement; settlement purpose; central bank credit policy; routine monetary policy; monetary policy point of view; monetary policy transmission mechanism; payments organization; payment system reform; Payment systems; Credit; Central bank credit; Monetary operations; Large value payment systems; Global (search for similar items in EconPapers)
Pages: 30
Date: 1998-05-01
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Citations: View citations in EconPapers (4)

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