The Impact of Central Bank Digital Currency Adoption on Monetary Policy Effectiveness: An Econometric Study of a Group of Countries During the Period 2016-2025

The research assesses how central bank digital currency (CBDC) implementation affects monetary policy effectiveness in selected African nations between 2016 and 2025, with a special emphasis on Algeria. The study analyzes six African nations Algeria, Nigeria, Ghana, Kenya, South Africa, and Morocco through fixed-effects panel econometric methods to determine whether CBDC adoption improves monetary policy effectiveness. The research uses a Monetary Policy Transmission Effectiveness (MPTE) index which measures monetary policy effectiveness through its two components of interest-rate pass-through and inflation responsiveness. The main independent variable CBDC adoption index measures the progress of CBDC initiatives from their initial stage to full retail implementation, while researchers track digital payment adoption rates and financial sector development and inflation levels and exchange rate fluctuations and economic growth as control variables.The research results demonstrate that CBDC adoption positively impacts monetary policy effectiveness because higher CBDC development levels improve monetary transmission. The research found that digital payment usage helps to enhance MPTE because electronic payment systems work together with the benefits brought by CBDs. The research demonstrates that inflation and exchange rate fluctuations create negative impacts which reduce monetary policy effectiveness by disrupting the transmission process. Financial depth has a positive effect on the system, but its impact remains weaker than the other factors. The research concludes that African countries including Algeria can enhance their monetary policy effectiveness through CBDC adoption, but the process requires both stable economic conditions and effective financial systems to achieve success