Despite the progress made in managing macroeconomic policies
in Tanzania, the expectations that the existing digital environment can support
stable monetary policy performance remain uncertain due to a lack of studies in
this area. There are concerns about the potential effects of cryptocurrencies
on monetary policy performance in Tanzania. This study investigated the effects
of digital currency on monetary policy in Tanzania. The main variables were
Bitcoin (BTC) and Mobile money transaction (MBT) as the independent variables
and Money supply (M3) as the dependent variable. A quantitative methodology was
employed, using empirical analysis and estimation methods. Quarterly
time-series data covering the period from 2014Q1 to 2021Q4 were used and were
obtained from the Bank of Tanzania, Tanzania National Bureau of Statistics and
online data from www.blockchain.com. The
Vector Error Correction Model (VECM) was used to estimate the empirical
regression model, while STATA version 14 was used to analyse data. The results
indicated a significant negative relationship between BTC and M3, and a
significant positive relationship between MBT and M3 in Tanzania. The study
concluded that digital currency has a significant effect on monetary policy in
the country. It is recommended that both the bitcoin and mobile money
transaction markets work together to affect monetary policy and economic growth
in the country. Therefore, the government should show more concern about the
use of these two forms of money market so as to make the country achieve high
economic growth.
Author(s) Details
Kennedy Arthur
Wainyaragania
Economics and Business at the Faculty of Business Administration, Catholic
University of Mbeya (CUoM), Tanzania.
Please see the book here :- https://doi.org/10.9734/bpi/nabme/v12/6950
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