The Potential Impact of Digital Currencies on Inflation in Developing Countries

Research Article
Open access

The Potential Impact of Digital Currencies on Inflation in Developing Countries

Chenyi Xue 1*
  • 1 St Andrew's High School    
  • *corresponding author chenyixueevan@gmail.com
AEMPS Vol.187
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-173-0
ISBN (Online): 978-1-80590-174-7

Abstract

Developing countries typically experience frequent inflation due to weak budgetary systems, fiscal deficits, and additional surprises. In recent years, digital currencies—including cryptocurrencies and central bank digital currencies ( CBDCs ) —have emerged as potential tools for addressing these challenges. This report investigates whether digital currencies substantially reduce inflation or increase monetary policy success in a growing economy. It discovered that digital currencies offer novel programmes for value transfer. However, they are not intrinsically anti-inflationary, based on economic theory, poetry, and case reports from Nigeria, Venezuela, Jamaica, and the Bahamas. Cryptocurrencies provide a hedge in deflationary settings but lack key control and stability. CBDCs have yet to significantly impact inflation outcomes despite their promise for financial inclusion and data collection. Ultimately, digital currencies may be a part of a more comprehensive system of good financial governance. This report argues for a careful yet strategic approach where modern technology complements, rather than replaces, standard fiscal and monetary policy tools.

Keywords:

Digital currency, inflation, cryptocurrency

Xue,C. (2025). The Potential Impact of Digital Currencies on Inflation in Developing Countries. Advances in Economics, Management and Political Sciences,187,39-44.
Export citation

References

[1]. Friedman, M. (1970) The Counter-Revolution in Monetary Theory. Institute of Economic Affairs, 51, 1–24.

[2]. Yermack, D. (2018) Is Bitcoin Money? Journal of Economic Perspectives, 32, 31–50.

[3]. Narula, N. and Hileman, G. (2020) Cryptocurrencies and Inflation: A Safe Haven? MIT Media Lab Working Papers, 5, 1–19.

[4]. Bank for International Settlements. (2022) CBDCs in Emerging Economies: Design, Implementation and Policy Challenges. BIS Papers, 122, 1–48.

[5]. Central Bank of Nigeria. (2022) eNaira Implementation Report. Central Bank of Nigeria Publications, 4, 1–28.

[6]. Chainalysis. (2023) Geography of Cryptocurrency 2023 – Sub-Saharan Africa Focus. Chainalysis Market Report, 2, 1–36.

[7]. Ozili, P.K. (2024) Central Bank Digital Currency, Economic Growth and Inflation in Nigeria. Journal of Financial Regulation and Compliance, 1, 15–33.

[8]. Reuters. (2021) As Venezuela’s Economy Regresses, Crypto Fills the Gaps. Reuters Business Report, 8, 1–6.

[9]. Bank of Jamaica. (2023) JAM-DEX Rollout and Public Response Brief. Bank of Jamaica Bulletin, 2, 1–21.

[10]. Central Bank of The Bahamas. (2023) Sand Dollar Performance Review 2020–2023. Bahamas Central Bank Reports, 1, 1–25.

[11]. World Bank. (2022) Financial Inclusion and Digital Access in Sub-Saharan Africa. World Bank Economic Review, 36, 203–224.

[12]. Ferrari, M., Mehl, A. and Stracca, L. (2022) Central Bank Digital Currency: Opportunities, Challenges and Design. ECB Occasional Paper Series, 286, 1–54.

Cite this article

Xue,C. (2025). The Potential Impact of Digital Currencies on Inflation in Developing Countries. Advances in Economics, Management and Political Sciences,187,39-44.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

Disclaimer/Publisher's Note

The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of EWA Publishing and/or the editor(s). EWA Publishing and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.

About volume

Volume title: Proceedings of ICMRED 2025 Symposium: Effective Communication as a Powerful Management Tool

ISBN：978-1-80590-173-0(Print) / 978-1-80590-174-7(Online)
Editor：Lukáš Vartiak
Conference website: https://2025.icmred.org/Bratislava.html
Conference date: 30 May 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.187
ISSN：2754-1169(Print) / 2754-1177(Online)

© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license. Authors who publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open access policy for details).

References

[1]. Friedman, M. (1970) The Counter-Revolution in Monetary Theory. Institute of Economic Affairs, 51, 1–24.

[2]. Yermack, D. (2018) Is Bitcoin Money? Journal of Economic Perspectives, 32, 31–50.

[3]. Narula, N. and Hileman, G. (2020) Cryptocurrencies and Inflation: A Safe Haven? MIT Media Lab Working Papers, 5, 1–19.

[4]. Bank for International Settlements. (2022) CBDCs in Emerging Economies: Design, Implementation and Policy Challenges. BIS Papers, 122, 1–48.

[5]. Central Bank of Nigeria. (2022) eNaira Implementation Report. Central Bank of Nigeria Publications, 4, 1–28.

[6]. Chainalysis. (2023) Geography of Cryptocurrency 2023 – Sub-Saharan Africa Focus. Chainalysis Market Report, 2, 1–36.

[7]. Ozili, P.K. (2024) Central Bank Digital Currency, Economic Growth and Inflation in Nigeria. Journal of Financial Regulation and Compliance, 1, 15–33.

[8]. Reuters. (2021) As Venezuela’s Economy Regresses, Crypto Fills the Gaps. Reuters Business Report, 8, 1–6.

[9]. Bank of Jamaica. (2023) JAM-DEX Rollout and Public Response Brief. Bank of Jamaica Bulletin, 2, 1–21.

[10]. Central Bank of The Bahamas. (2023) Sand Dollar Performance Review 2020–2023. Bahamas Central Bank Reports, 1, 1–25.

[11]. World Bank. (2022) Financial Inclusion and Digital Access in Sub-Saharan Africa. World Bank Economic Review, 36, 203–224.

[12]. Ferrari, M., Mehl, A. and Stracca, L. (2022) Central Bank Digital Currency: Opportunities, Challenges and Design. ECB Occasional Paper Series, 286, 1–54.

For authors
Guide for authors Policies for authors Aims and scope Subscription Open access policy
For editors
Policies for editors Editorial board
For reviewers
Policies for reviewers Privacy policy

Cookies are used by this site.
Copyright © 2024 EWA Publishing, its licensors, and contributors. All rights reserved, including text and data mining, AI training, and similar technologies.