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The digital economy has significantly transformed economic growth by introducing innovations in payment systems and financial services. The modernization of payment instruments through monetary policy has enhanced the ability to control inflation and ensure financial system stability. This study aims to analyze the effectiveness of monetary policy and the utilization of the digital economy in maintaining financial stability in Indonesia. Using time series data from 2010 to 2024 obtained from the World Bank, this research applies the Vector Autoregression (VAR) method to examine both short-term and long-term relationships among variables, including e-money, money supply, inflation, exchange rate, interest rate, and credit card usage. The results show that e-money has a significant reciprocal influence on the money supply, while inflation is also affected by e-money and interest rates. The impulse response function demonstrates that the interactions among these variables tend to converge towards equilibrium over time. Variance decomposition analysis indicates that in the short term, e-money primarily drives financial stability, whereas in the medium and long term, the money supply plays a dominant role. Overall, the findings suggest that monetary policy, supported by digital economic systems, effectively enhances financial system stability in Indonesia. This research contributes to understanding the dual effect of digital payment innovations and provides recommendations for policymakers to strengthen financial inclusion, economic resilience, and macro-financial stability in the digital era.

This study uses quantitative analysis in the age of digital transformation to ascertain how Indonesia's monetary policy's stability and effectiveness are affected by digital economic characteristics. The Simultaneous Regression approach (also known as structural regression) with two simultaneous equations—monetary stability and monetary policy effectiveness—is the data analysis technique used in this study. Monetary stability (SM), the volume of digital transactions (VTD), the number of digital service users (PLD), financial technology adaptation (ATF), monetary policy effectiveness (EKM), e-commerce growth (PEC), and digital financial inclusion (IKD) are the variables considered in this study. The findings indicate that the variables VTD, PLD, ATF, and EKM have a 62.3% influence on the SM variable, with other variables outside the estimation accounting for the remaining 37.7% of SM. The estimation results show that the Effectiveness of Monetary Policy (EKM) can be explained by the Digital Financial Inclusion (IKD) and Monetary Stability (SM) variables by 11.7% and 88.3%, respectively. Aside from the estimations in the model, additional factors also affect the Effectiveness of Monetary Policy (EKM).