Does Development of Non-Cash Payment Affect Broad Money in Indonesia

Dwi Nita Aryani, Siti Munfaqiroh, Endys Kartikasari

The payment system technology shifts the role of cash payment into non-cash payment instrument and may affect broad money. Broad money (M2) may cover M1 (currency in circulation+demand deposit), saving deposits, time deposits in Rupiah and foreign currency, demand deposits in foreign currency and securities other than shares issued by monetary system owned by domestic private sector, with remaining maturity up to one year. The purpose of this study is to find the effect of development of non-cash payment on broad money (M2). This research used data from transaction of credit card, debit card, e-money, BI-RTGS and BINCS transaction during 2012-2017. The result exhibits that transaction volume of Credit Card, Debit Card, E-money, BI-RTGS and BI-NCS, simultaneously affect broad money. The development of non-cash payment contributes broad money (Y) in Indonesia only 22.3%. Partially, BI-RTGS and BI-NCS are the most significant factors influence broad money in short term in Indonesia.

Volume 12 | 06-Special Issue

Pages: 747-753

DOI: 10.5373/JARDCS/V12SP6/SP20201089