Transformation of Monetary Policy Transmission Mechanisms in the Digital Economy Era

Abstract

The rise of the digital economy is reshaping monetary policy transmission mechanisms. This study employs a system dynamics approach to explore the transformation of monetary policy transmission mechanisms in the digital economy era. The research begins by constructing a macroeconomic model that incorporates both traditional financial sectors and digital financial sectors. Through model simulations, the study analyzes the impact of emerging factors such as digital payments, cryptocurrencies, and online lending platforms on the effectiveness of monetary policy. The findings suggest that the digital economy accelerates fund flows, enhancing the speed of monetary policy transmission, but may also weaken the role of certain traditional transmission channels. The study pays particular attention to the potential impact of digital currencies on monetary policy control, including the role of central bank digital currencies (CBDCs). Through international comparative analysis, the study summarizes monetary policy innovations in different countries in response to the challenges of the digital economy. The research also explores the application of big data and artificial intelligence technologies in improving the accuracy of monetary policy decision-making. However, the study also points out new challenges brought by the digital economy, such as financial disintermediation and increased cross-border capital flows. In response to these challenges, the study proposes recommendations for optimizing the monetary policy toolkit and strengthening international policy coordination. Finally, the research looks ahead to the potential applications of quantum computing in future monetary policy analysis. This study provides a theoretical framework for understanding and addressing the transformation of monetary policy transmission mechanisms in the digital economy era, contributing to more effective monetary policy strategies for central banks.