IFin Seminar, Sergey Sarkisyan - The Ohio State University "Digital Payments and Monetary Policy Transmission"

Speaker: Sergey Sarkisyan

Title:         "Digital Payments and Monetary Policy Transmission"

Date:        October 16, 2025

Time:        12:25 - 13:40

Room:        Red Room (Executive Center) USI West Campus

Abstract:

We examine the impact of digital payments on the transmission of monetary policy by leveraging administrative data on Brazil’s Pix, a digital payment system. We find that Pix adoption reduces banks' market power, making them respond more to changes in policy rates. We estimate a dynamic banking model in which digital payments amplify deposit demand elasticity. Our counterfactual results reveal that digital payments intensify the monetary transmission by reducing banks' market power – banks respond more to policy rate changes, and loans decrease more after monetary policy hikes. We find that digital payments impact monetary transmission primarily through deposit market power.