If a country entirely phased out cash and replaced it with digital currency would it become destabilized?
If the country makes its own digital currency and develops itself properly and cautiously it might be stable because it is well managed. Unless a country adopts bitcoin (for example) and wipes out cash it will not be good, because the economy will depend entirely on the development of bitcoin, which indirectly the country will depend on others (bitcoin) because bitcoin is used by many people in world. Fluctuations will depend on the development of bitcoin rather than on the country itself. It may be different if the country makes its own digital currency, whose fluctuations depend on the country's own development. But I do not think it will be done in the near future because it takes careful consideration because it will be a big risk if one goes wrong. And now in fact the production of money is still very high, so real money is still needed.