The Theoretic and Empirical Analysis on the Impact of Network Virtual Money on Real Money Supply

Existing literatures took network virtual money as a prepaid method which has no effects on real money supply. We argue that, the phenomenon that virtual money acts as a medium of exchange in the real goods trade and that real GDP affected by the virtual community should be taken into consideration when studying the effects of virtual money on real money supply. This paper classified the effect of virtual economy on real economy into three types: no substitution effect, positive substitution effect and negative substitution effect. The impact of virtual money on real money supply is mainly reflected in two aspects: First, the substitution effect of virtual economy on real economy affects the volume of real monetary base; Second, the net effect of crowding-out effect of virtual money and the behavior effect of issuers changes the internal monetary base structure of cash and reserve, leading to the cash-deposit ratio reduction and real monetary multiplier increase. Based on the analysis of data in China, we found that the effect of virtual economy on real economy is negative substitute currently, we also calculated the intensity of the crowding-out effect of virtual money to real money, verified that the crowding-out effect is greater than the behavior effect recently. Finally, new monetary statistical and monitoring indicator is advanced for Central Bank under the influence of virtual money, and the marginal substitution propensity of virtual money is advised to measure whether the volume of virtual money should be monitored and integrated into the amount of money supply.