THE EFFECTS OF FINANCIAL INNOVATION AND DEVELOPMENT ON MONETARY POLICY

Abstract

This paper focuses on the effects of financial development and innovations on monetary policy. Generally speaking, financial innovation refers to technological advances that facilitate better access to information, means of trading and payment, and to all the emergence of the new financial services and instruments. It also refers to the new forms of Organization and more complete and developed financial markets. Since the 1960’s, through about 50 years of development, financial innovation has nearly become a global trend of financial development. As will be noted later in this paper, for countries to be successful, financial innovation must provide improved services that will perfectly meet the needs of the financial system participants or reduce costs and risks The objectives of this paper is therefore to critically analyze whether financial innovation actually affects monetary policy, and if so, so what extent.

Keywords

• Development, Financial Innovation, Monetary Policy.

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