Mediating Role of Central Bank Digital Currency on the Effect of Monetary Policy on Banking System Stability in Nigeria.

Abstract

This study examined the mediating role of central bank digital currency on the effect of monetary policy on banking system stability in Nigeria. The study drew its data from an online questionnaire targeted at professionals and experts, which was analysed with a structural equation model (SEM). The study is limited to 150 respondents. The findings show that monetary policy has a positive impact on central bank digital currency and a negative impact on banking system stability. The central bank digital currency has a positive mediating role on the effect of monetary policy on the banking stability system. The research came to the conclusion that digital money issued by central banks in Nigeria has a beneficial mediating role in enhancing the impact of monetary policy on the stability of the banking system. It is advised that the monetary authority work to advance the use of digital money issued by central banks in the economy and make policies that will support the stability of the banking system.