This study examines the relationship between digital-money exposure and exchange-rate volatility across 28 emerging and advanced economies over the 2021–2024 period. We construct a Digital Money Exposure (DME) index combining cryptocurrency adoption and stablecoin exposure into a unified cross-country measure. We then examine its relationship with exchange-rate volatility using a panel-data framework. The results indicate a negative association between digital-money exposure and exchange-rate volatility, with the evidence strongest across countries and weaker when relying on within-country variation over the short four-year panel. Lagged and instrumental-variable analyses provide directionally consistent complementary evidence, while sensitivity analyses using alternative DME constructions and treatments of extreme observations generally preserve the negative relationship, although statistical precision varies across specifications. The findings point primarily to persistent cross-country differences in digital-money exposure rather than short-run within-country changes, highlighting the relevance of digital money for exchange-rate dynamics.
