Impact of using cryptocurrencies on monetary policy: A model of El Salvador

Abstract

In this study, the positive impact of cryptocurrencies on the monetary policy represented by the financial and banking sector of the State of El Salvador is evaluated for being one of the countries that do not have a national currency; in order to measure the extent of confidence and acceptance of banks and their customers in El Salvador to adopt cryptocurrencies in the field of banking and financial work, in addition to the possibility of issuing cryptocurrencies by the Central Bank of El Salvador. The evaluation tool was a questionnaire with two models; the first was for the banking sector, as it was distributed to a group of managers and employees of the 6 largest banks in El Salvador, and the second model was for the financial sector and included a group of companies and individuals dealing in cryptocurrencies. SPSS26 was used to analyze the answers to the questionnaire. A statistically significant impact relationship was found to adopt of cryptocurrencies and the monetary policy of the banking sector by reducing the costs of banking services and raising operational efficiency, developing and upgrading banking services. It was found that there is a statistically significant influence relationship for the adoption of encrypted currencies, the monetary policy of the financial sector, the development of e-commerce, in addition to the use of the e-wallet. The recommendations encourage the responsible authorities in El Salvador to move towards the application of cryptocurrency trading while strengthening the necessary legal and regulatory frameworks that govern and regulate existing transactions using cryptocurrencies and e-commerce, in addition to developing and promoting the use of their new technologies in a comprehensive manner.