Does the development of non-cash payments affect monetary policy transmission?

The different degree of development of retail payment systems generates significant differences in the structure and operations of the financial system. These differences affect the degree of efficiency of the mechanisms of monetary policy transmission, including the bank-lending channel. Taking the case of Spain for 1992-2000, we show that banks appear to have taken advantage of the non-cash instruments to increase deposits and, therefore, to adjust their loan supply in the face of monetary policy tightening (76 words).