Digital Financial Inclusion, Inflation Expectations, and Currency Confidence in Developing Economies

This chapter examines how digital financial inclusion influences inflation expectations, currency confidence, and monetary policy transmission, particularly in African monetary unions and fragile institutional contexts. Drawing on behavioral political economy and monetary transmission theory, the study analyzes how digital finance reshapes the “confidence channel” of monetary policy by accelerating information flows, expanding financial participation, and altering public perceptions of currency stability. Using comparative evidence from countries such as Kenya, India, Nigeria, and WAEMU/CEMAC member states, the chapter demonstrates that digital financial systems can strengthen macroeconomic confidence and improve policy effectiveness when supported by credible institutions and effective regulation. The chapter concludes that central banks must integrate digital financial governance, communication strategies, and financial literacy policies into modern monetary frameworks to preserve currency credibility and macroeconomic stability in the digital age.