Can the manipulation of money supply affect the stability of digital currencies?

1 answers

• Dec 24, 2021 · 3 years ago
  Yes, the manipulation of money supply can impact the stability of digital currencies. Digital currencies, like any other asset, are influenced by supply and demand dynamics. When the money supply is manipulated, it can disrupt these dynamics and lead to price volatility. For example, if the money supply is increased significantly, it can dilute the value of existing digital currencies and lead to a decrease in their prices. On the other hand, if the money supply is restricted, it can create scarcity and drive up the prices of digital currencies. Therefore, any manipulation of the money supply can have a direct impact on the stability of digital currencies.
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