Digital Currency and Monetary Policy in the South African Economy: Praxis of Financial Dualism and Suggestion for Nigerians

The acceptance of digital currency transactions by many African countries seems to be relatively low to enhance a cashless economy spurs the need for this study. This study aims to identify the impact of digital currency operations and suggest Nigerians cashless policy management. The study tests the praxis of financial dualism for digital currency and monetary policy in the South African economy. The Market capitalization (Mcap) and Volume (Vol) of crypto-currency, and monetary policy rate (MPR) of fourth-month ending quarterly information were extracted from Central Bank Digital Currency and the South Africa Reserve Bank around April 2013 to December 2019. The Augmented Dickey-Fuller unit root and the Autoregressive Distributive Lag tests were conducted. The ADF unit root test results were not stationary at level but became stationary at the first level difference. Furthermore, the results of the ARDL indicated no positive and significant relationships between Market Capitalization and Volume of crypto-currency and monetary policy in the South African economy. However, positive and significant relationships exist in monetary policy in the South African economy. The study then concluded that (Mcap) and (Vol) of digital currency did not constitute the significant variables of policy to influence the monetary policies in the South African economy, hence they operate independently. The study then concluded that a decision to adopt and regulate digital currency operation or not in Nigeria does not affect. The study, therefore, recommends the Nigerian to embrace the digital environment in terms of regulations for tax advantage.