The aim of this paper is to examine the effects of financial inclusion (FI) on money velocity stability in WAEMU. To do so, we used data from the eight (8) WAEMU countries covering the period 2007-2020. The results of our estimations using the Pooled Mean Group (PMG), two-stage least squares (2SLS) and Generalized moment method (GMM) estimators reveal that an improved FI is associated with a decline of money velocity in both the narrow (V1) and broad (V2) sense in the WAEMU, and does not compromise its stability. Also, in the short term, the coefficients associated with the effects of the different f inancial inclusion variables on the velocity of money show the expected negative sign, but are statistically insignificant. Furthermore, our results show that in the long term, income per capita has a positive and significant effect on money velocity. While the nominal interest rate on loans and the nominal exchange rate have negative effects on money velocity in WAEMU. In this context, the monetary authorities of WAEMUcanpursue their initiatives to foster FI, while emphasizing the use of formal financial services. But these innovations must be governed by an appropriate regulatory framework to avoid any spillover effects or abuses.

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Keywords

Financial Inclusion, Money Velocity, Financial Innovations, WAEMU