Future Forum | Bank of England

How does internet banking affect demand for money models?

by
Bekah Griffiths
Bekah Griffiths | 1 month ago | in Money, Money, Money

The undergrad textbook I have has a model that balances the cost of withdrawing cash vs the convenience of having it. But now you dont have to physically visit a bank so perhaps the costs are now more like fees for transferring from interest bearing accounts to current accounts. Im going to be studying MSc level soon so will probably learn about this anyway but Ive always wondered...

Shelley (BoE Moderator) 4 weeks ago

Is there a particular question you are asking or discussion point? Do you think the future of banks will change due to business models changing?

Bekah Griffiths 4 weeks ago

I don’t really know enough about the subject yet to make too much comment, hence the question, but it would relate more to how monetary policy operates, since demand for money needs to be taken into consideration when adjusting the supply (or rather, influencing it via the interest rate.) Im sure loads of research has been done on it but from my point of view, it means I cant really rely on the model in my textbook so well.

Shelley (BoE Moderator) 4 weeks ago

Interesting thoughts! It will be good to get others views on this too? :)

Bekah Griffiths 4 weeks ago

Yes, I think ill be coming across more up to date models soon and learning about this in depth as Im going to be studying it but Id be interested to know what the current views are on how this affects policy

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