Monetary unions and crypto-currency competition: Implications for financial stability

This thesis contains three full article chapters. Chapter one is a general introduction of the thesis explicitly stating the research gap, purpose and objectives of the essays and their significance. Chapter two develops a model of nonperforming loans that is dependent on the lending gap and the output gap. Using nonperforming loan ratios as a measure of financial soundness, the model is used to examine the financial stability implication of a monetary union on member countries. This is tested in a counterfactual framework using Ghana, a member of the yet to be implemented West African Monetary Zone. Chapter three reviews the literature on Hayek's Denationalisation of Money proposal prior to and after the proliferation of cryptocurrencies. It also evaluates the extent to which cryptocurrencies align with Hayek's proposal in the denationalisation of money. It is concluded that, opinions on Hayek's proposal subtly changed for critical to cautious acclaim. Also, it is concluded that custodial stablecoins best reflects Hayek's proposal and are the crypto asset most likely to survive government legibility regulations. In chapter four, the impact crypto-currency substitution, proxied by cryptocurrency returns, on exchange rate volatility is examined empirically for the case of Nigeria. Cryptocurrency returns is found to have a positive impact on volatility of the Naira.