This study empirically aims to analyze the impact of primary monetary policy stance and transmission mechanisms of the European Central Bank (ECB)—such as the total assets of the ECB, long-term interest rate based on the government bond yields, and the EURUSD exchange rate—on major volatile cryptocurrencies like Bitcoin and Ethereum, as well as the leading stablecoin Tether. To this end, the study employs the linear Autoregressive Distributed Lag (ARDL) and the Bootstrap ARDL (BA-ARDL) procedures, robust approaches with limited data in time series analysis. The dataset consists of monthly data over the period from January 2019 to December 2025. We summarize the novel and robust primary empirical results of our study as follows: First, (i) it is revealed that the ECB’s balance sheet expansion has encouraged Bitcoin and Ethereum, yet has also, to a limited extent, suppressed Tether. Secondly, (ii) while the ECB’s long-term interest rate negatively impacts the prices of Bitcoin, Ethereum, and Tether, the negative impact on Tether is relatively weaker. Finally, (iii) the EURUSD exchange rate positively affects Ethereum, while its effect on Bitcoin is not statistically significant. On the other hand, at a 10% significance level, EURUSD has a weak negative effect on Tether. In conclusion, the empirical evidence demonstrates that the primary monetary policy stance and transmission mechanisms of the ECB influence the leading digital assets in distinct ways. Taking our findings into account is crucial for designing the digital euro in terms of financial stability and regulatory framework. Finally, we offer sound policy implications for the ECB based on empirical findings.
Karabiber et al. (Thu,) studied this question.
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