Publication Date

2026

Document Type

Dissertation/Thesis

First Advisor

Kuehl, Colin

Degree Name

M.A. (Master of Arts)

Legacy Department

Department of Political Science

Abstract

This thesis examines whether the rise of cryptocurrencies affects the constraints states face in exercising monetary sovereignty, specifically in stabilizing their currencies. The analysis tests two hypotheses: first, that higher levels of cryptocurrency interests are associated with greater exchange-rate volatility; and second, that this relationship is stronger in countries with more stringent capital-flow management measures. Drawing on a panel dataset of country–month observations across 46 countries from 2017 to 2024, The results provide no consistent evidence that cryptocurrency interest is directly associated with higher exchange-rate volatility. Similarly, the interaction between cryptocurrency interest and capital controls remains insignificant across all models, indicating that cryptocurrencies do not systematically weaken the effectiveness of capital flow management policies in stabilizing exchange rate. In contrast, traditional macroeconomic variables, particularly inflation and foreign exchange reserves, show strong and consistent relationships with exchange-rate volatility. These results highlight the continued importance of conventional macroeconomic fundamentals in shaping exchange-rate stability.

Extent

68 pages

Language

en

Publisher

Northern Illinois University

Rights Statement

In Copyright

Rights Statement 2

NIU theses are protected by copyright. They may be viewed from Huskie Commons for any purpose, but reproduction or distribution in any format is prohibited without the written permission of the authors.

Media Type

Text

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