The Impact of Digital RMB Pilot on the Efficiency of Monetary Policy Transmission

Abstract

This paper takes panel data from Shenzhen, Suzhou, Chengdu (Digital RMB pilot cities) and Changsha (non-pilot city) from 2019 to 2023 as samples, and uses the Difference-in-Differences (DID) model to empirically test the impact of the Digital RMB pilot on the efficiency of monetary policy transmission. The study finds that the Digital RMB pilot significantly improves the efficiency of monetary policy transmission, as evidenced by the enhanced correlation between GDP growth rate, loan balance growth rate and policy interest rates in pilot cities. Moreover, the improvement of payment efficiency and financial inclusion are important transmission mechanisms. Heterogeneity analysis shows that the policy effect is more significant in cities with better economic foundations. This research provides empirical evidence for the optimization of monetary policy in the era of digital currency.