Abstract:
The technology of Digital Currency Electronic Payment (DCEP) in China has become relatively mature and has entered the pilot stage. Thus, the study of DCEP has a strong practical significance to the economic effect. By establishing a four sector DSGE model, this paper studies the impact of the issuance of DCEP on the economy through the continuity of monetary policy. The results show that first, the issuance of digital currency not only suppresses the volatility of indicators directly related to currency, but also enlarges the volatility of other indicators, and the latter has less volatility than the former; second, the economies adopting digital currency are more difficult to adapt to the impact of technology and government expenditure; third, after the issuance of digital currency and the enhancement of monetary policy continuity, the economic growth will increase the relative influence of other shocks is weakened, and the impact is more from the interest rate shocks. According to the research results, we believe that in economies issuing DCEP, monetary authorities should be clear about monetary policy tools and pursue more continuous monetary policy.