The ratio of currency in circulation is decreasing as compared to the deposits, because of the extensive use of the electronic currency, thus have affected the money multiplier. Money multiplier is one of the main decisive factors of money supply, so the development of electronic money will have a further influence on money supply. The main purpose of this paper is researching and analyzing the influence of electronic currency upon money multiplier. The approach employed in this article is to use theoretic and empirical analysis. First, according to the theory and data-graph, this article analyses the influence of electronic currency upon money multiplier. Second, based on the previous related annual data of China, and then establish the econometrics model to analyze how much does electronic currency affect the money multiplier. The empirical analysis demonstrates that the extensive use of electronic currency does have influence on the money multiplier. There is a positive correlativity between them. In the other words, with the increasing of e-money utilization ratio, the money multiplier will tend to be greater. Having a correct understanding on the influence of electronic currency upon money multiplier is helpful to do a further analysis of money supply under the conditions of using electronic currency, which will have a profound significance for the monetary authorities to make a flexible and effective monetary policy.
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