Digital currency adoption and macroeconomic stability: A quasi-natural experiment

Wenxue Li and Fei Liu

Economic Analysis and Policy, 2025, vol. 87, issue C, 561-568

Abstract: The adoption of digital currency has been a hot topic in recent years, attracting extensive discussions from academia and industry. In this paper, we explore the implications of digital currency adoption for macro economy. Based on the Chinese evidence, this research offers robust evidence that digital currency adoption substantially enhances macroeconomic stability. The effect is even evident in regions with lower financial inclusion and lower GDP. This research takes advantage of the difference-in-differences approach to effectively deal with endogeneity concerns. This study is expected to substantially advance the explosive literature on the consequences of digital currency.

Keywords: Digital currency; Macro economy; Stability; Financial innovation (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:87:y:2025:i:c:p:561-568

DOI: 10.1016/j.eap.2025.06.026

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