Proceedings of the 2026 5th International Conference on Public Service, Economic Management and Sustainable Development (PESD 2026)

2026 5th International Conference on Public Service, Economic Management and Sustainable Development (PESD 2026)

📍Dali, China🗓️ 11-13 September 2026
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Monetary Policy Without Cash?

An IS-LM Analysis of Transmission in a Cashless Society

Authors
Yijin He1, *
1Zhejiang Zhenhai High School, 32 Gulou East Road, Zhaobaoshan Street, Zhenhai District, Ningbo City, Zhejiang Province, China
*Corresponding author. Email: ting.liu@worldshaper.cn
Corresponding Author
Yijin He
Available Online 10 November 2026.
DOI
10.2991/978-94-6239-825-2_21How to use a DOI?
Keywords
cashless society; monetary policy; IS-LM model; money demand; digital payments; interest-rate transmission
Abstract

This paper asks whether monetary policy remains effective when physical cash largely disappears. Using a theory-driven IS-LM analysis, published money-demand estimates, and official indicators from the euro area, China, and the United States, it distinguishes a cashless society from a moneyless economy. Digital payments may reduce transaction balances and alter the income coefficient of money demand, while financial innovation may change interest sensitivity on both the LM and IS sides. The analysis now makes explicit that the standard comparative statics describe an interior equilibrium: when the policy rate reaches an effective lower bound, conventional rate cuts become less reliable, even if the disappearance of banknotes weakens the physical cash constraint. Empirical estimates suggest that money-demand parameters vary materially across aggregates and institutional settings, while observed digitalisation has not eliminated currency holdings. Monetary policy therefore remains viable, but implementation should rely on remunerated reserves, a clearly designed floor or corridor, standing facilities, and—when the lower bound binds—forward guidance, asset purchases, or targeted liquidity operations. The transition should also preserve inclusion, privacy, and payment-system resilience.

Copyright
© 2026 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 2026 5th International Conference on Public Service, Economic Management and Sustainable Development (PESD 2026)
Series
Advances in Economics, Business and Management Research
Publication Date
10 November 2026
ISBN
978-94-6239-825-2
ISSN
2352-5428
DOI
10.2991/978-94-6239-825-2_21How to use a DOI?
Copyright
© 2026 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Yijin He
PY  - 2026
DA  - 2026/11/10
TI  - Monetary Policy Without Cash?
BT  - Proceedings of the 2026 5th International Conference on Public Service, Economic Management and Sustainable Development (PESD 2026)
PB  - Atlantis Press
SP  - 215
EP  - 222
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-825-2_21
DO  - 10.2991/978-94-6239-825-2_21
ID  - He2026
ER  -