Defining the Conditions for an Effective Transition to a Decentralized Currency Standard in Developing Economies
Author:
Salvatore Iovino ’24Co-Authors:
Faculty Mentor(s):
Christopher Magee, Economics departmentFunding Source:
Walthour Fellowship FundAbstract
In an increasingly digitized world, there is currently a significant shortage of literature on the benefits and drawbacks of a digital economy, particularly in regards to a national digital
currency standard. This research is designed to research the monetary policy measures designed to establish a Central Bank Digital Currency that fosters greater economic growth and inclusion within developing economies. Economic growth, in this instance, can be defined as increased rates of individual participation within an economy as well as a greater per-capita income for individuals within the economy. The selected method of inquiry for this research is a literature review of existing literature pertaining to individual topics surrounding how digital currency currently functions in developing economies, and how monetary policy could potentially affect a
digital currency standard. Findings from this project include: nationalized digital currencies would allow for more efficient transmission of remittances, Bitcoin differs from a CBDC from a
policy management perspective but could be fairly similar in regards to a technological/manufacturing perspective, and improved individual financial participation in
developing countries as a result of the use of a digital currency is yet to be empirically proven. While these findings are significant, they are largely a baseline of information to inform future
studies in the field. As a result of digital currencies being such a new development for all economies, and the limitations on that country’s economy or economic data as a result of its
political situation, statistically significant findings about the effects of national digital currencies are few and far between. Future research pertaining to the project aspires to provide an empirical correlation between the use of digital currency and improved individual financial participation, resolving the third finding of this study.