The Effect of Digital Currency on Monetary Policy in Tanzania: An Empirical Investigation

Wainyaragania Kennedy Arthur *

Department of Economics, St. Augustine University of Tanzania, Tanzania.

*Author to whom correspondence should be addressed.


Abstract

This study investigates the effects of digital currency on monetary policy in Tanzania., The main variables of the study included BTC and MBT as the independent variables and M3 as a dependent variable. The quantitative methodology used involved the applications of econometrics analysis as the estimation methods. The quarterly time series data (2014q1 – 2021q4) used were obtained from both the Bank of Tanzania, the Tanzania National Bureau of Statistics and the online data from www.blockchain.com. The main variables of the study included BTC and MBT as the independent variables and M3 as a dependent variable. The Vector Error Correction Model (VECM) was used to estimate the empirical regression model, while STATA software 14 was used to analyse the data. The results indicate of the VECM indicated that there was a significant negative relationship between BTC and M3 variables on the one the one hand, and a significant positive relationship between MBT and M3 variables in Tanzania. The study concluded that there was a significant effect of the digital currency on monetary policy in the country. The study recommended that the government should education the people on how the digital currency operates, it should strengthen monetary policy practices, and try to learn from others countries that use the digital currency. This would help the country to officially allow or reject the use of digital currency in the country.

Keywords: Digital currency, bitcoin, monetary policy, VECM, mobile money transaction, Tanzania


How to Cite

Arthur, W. K. (2023). The Effect of Digital Currency on Monetary Policy in Tanzania: An Empirical Investigation. South Asian Journal of Social Studies and Economics, 20(4), 25–34. https://doi.org/10.9734/sajsse/2023/v20i4740

Downloads

Download data is not yet available.

References

Khiaonarong, Humphrey D. Cash use across countries and the demand for central bank digital currency. International Monetary Fund. 2019;19.

Kaikati G. The reincarnation of barter trade as a markerting tool. Journal of Marketing. 2019;17-24.

Mankiw G. Evolution of Money. National Bureal of Economics Research Journal; 1999.

Schenk R. From commodity to bank-debt money. Wueconb; 2009.

Adam, Casto J. Building a monetary regime for 21st century. Kenya: Oxford University; 2010.

Goede GW. Wirtschaftsenglish. English-Deutsch; 2000.

Besson S. E-Money a new private currency. Bern: Stuttgart; 2019.

Bank of Tanzania. Caution over digital currency. Tanzania: BOT; 2021.

Igoni, Woroma J. Digital currency and monetary policy in the South Africa economy: Praxis of financial dualism for nigerial. Asian Journal of Economics, Financial and Management. 2020;49-57.

Hardy, Norgaard JR. Reputation in the black market. An emperical and the theoretical analysis of the deep web. Journal of International Economic; 2016.

Myint H. Economic theory and the underdeveloped countries. New York: New York: Oxford; 1971.

Chen, Pandey Y. The value of bitcoin in inhancing efficiency of investors. Financial planning Journal; 2014.

Rahman A. Diflationary policy under digital and fiat currency competition. Economic research. 2018;171-180.

Berentsen A. Monetary policy implication of digital money. Bern: University of Bern; 1997.

Tanaka T. Possible consequences of digital cash. Peer Reviewed on the Nternet Journal; 1996.

Bordo, Levin A. Central bank digital currency and future monetary policy. NBER; 2017.

Katusiime L. Mobile money Use: The impact of macroeconomic policy and regulation. Economic Journal. 2021;50-60.

Gujarati DN. Basic econometrics 4th edition. TataMcGraw Hill, Delhi; 2004.

Boniface P. Potential and threats of crypto currency in the financial system in Tanzania. Tanzania: Mzumbe University; 2020.

Mawejje, Lakuma P. Macroeconomic effects of mobile money: Evidence from Uganda. Financial Innovation. 2019; 014-019.

Neter, Wasseraman, Kutner H. Applied linear regressionmodels. 4th Ed. USA: Iwin Inc; 1989.

Ramsha A. Impact of inflation on monetary policy: Case of Pakistan. Pakistan: University of Sargodha; 2016.