Macro-Financial Implications of Foreign Crypto Assets for Small Developing Economies

Released on by Alexander Copestake
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  • Macro-Financial Implications of Foreign Crypto Assets for Small Developing Economies Book Detail

  • Author : Alexander Copestake
  • Release Date : 2023-12-06
  • Publisher : International Monetary Fund
  • Genre : Business & Economics
  • Pages : 26
  • ISBN 13 :
  • File Size : 98,98 MB
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Macro-Financial Implications of Foreign Crypto Assets for Small Developing Economies by Alexander Copestake PDF Summary

Book Description: To explore risks associated with digital money, this Fintech Note simulates the hypothetical large-scale adoption of crypto assets in a model of a small open economy. The model highlights that a foreign-currency denominated stablecoin can amplify currency substitution and capital outflows in response to negative shocks. Monetary policy transmission is also weakened, forcing the central bank to adjust interest rates more aggressively in response to shocks. Capital flow management measures—if they do not constrain crypto flows—further incentivize households to hold foreign stablecoins for circumvention purposes, exacerbating the negative effects of crypto adoption on the macroeconomy. This underscores that widespread crypto adoption can weaken policymakers’ available options for mitigating external shocks and potentially increase cross-country spillovers.

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The Crypto Cycle and US Monetary Policy

The Crypto Cycle and US Monetary Policy

File Size : 49,49 MB
Total View : 9075 Views
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We examine fluctuations in crypto markets and their relationships to global equity markets and US monetary policy. We identify a single price component—which