Advanced Macroeconomics - Final project
"Implications of cryptocurrencies for the monetary systems: The case of Bitcoins in Turkey"
By Cardarello Fierro, M. & Ciarrocchi, M.
Cryptocurrencies have become a phenomenon that concerns many monetary authorities around the world, with Bitcoin (BTC) being the main driver of this market. Initially seen in a disinterested way, several countries discouraged the use of Bitcoins in the latest years because of its inappropriate influence on the monetary systems. This analysis is focused on Turkey, whose central bank banned cryptocurrencies for purchases in April 2021, considering them as a possible irreparable damage and a transaction risk. To understand the rationale for this decision, we develop a conceptual link between BTC and Turkey’s monetary aggregates (inflation, real exchange rate, and money velocity) by applying a GARCH modelling technique. We find evidence that BTC price and volatility have a negative effect on inflation growth.