Title: Cryptocurrencies and central banks' monetary policy roles

Authors: Joshua Adeyemi Afolabi; Blessing Ufuoma Olanrewaju

Addresses: Innovation and Technology Policy Department, Nigerian Institute of Social and Economic Research (NISER), Ibadan, Nigeria ' Economics and Business Policy Department, Nigerian Institute of Social and Economic Research (NISER), Ibadan, Nigeria

Abstract: The advent of cryptocurrencies has tremendously revolutionised the global financial system, facilitating borderless and seamless financial transactions. However, the high volatility in the value of cryptocurrencies, its decentralised network and lack of formal regulation pose severe threats to the monetary policy role of central banks. Hence, this study explored the dynamics of cryptocurrencies and how it affects the monetary policy roles of central banks. The study showed that cryptocurrencies help foster the actualisation of cashless economies and seamless international transactions but its lack of international coordination has continued to undermine tapping optimally into its inherent benefits. Therefore, this study emphasised the imperativeness of central bank digital currencies (CBDCs) for effective financial sector regulation and protection of users of this financial innovation. This would broaden the central banks' horizon and expand their capacities to harness the potential of this novel financial innovation for the effective administration of conventional and unconventional monetary policies.

Keywords: cryptocurrency; blockchain technology; central bank; monetary policy; global financial system.

DOI: 10.1504/IJEF.2023.129912

International Journal of Electronic Finance, 2023 Vol.12 No.2, pp.97 - 116

Received: 22 Jul 2021
Accepted: 23 Jul 2022
Published online: 03 Apr 2023 *

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