FameEX Hot Topics | Morgan Stanley Cautions That Bitcoin's Rapid Expansion and CBDCs Could Undermine US Dollar's Supremacy

Andrew Peel, the Head of Digital Assets at Morgan Stanley, has recently highlighted a potential transformation in the global financial landscape due to the rise of digital assets like Bitcoin and central bank digital currencies (CBDCs). This change, he suggests, might pose a challenge to the U.S. dollar's long-established role as the primary global currency. His analysis, outlined in an investment note dated January 12, explores the implications of this shift, particularly as the U.S. dollar currently represents about 60% of the world's foreign exchange reserves.

Peel draws attention to the SEC's approval of several spot Bitcoin ETFs as a key driver of this emerging trend. The substantial inflow into these ETFs, which has surpassed $1.18 billion weekly, signals a growing interest and investment in Bitcoin. Peel notes Bitcoin's significant global adoption over the last 15 years, with about 106 million people worldwide now owning Bitcoin and the presence of Bitcoin ATMs in over 80 countries, indicating its increasing global reach and influence.

Beyond Bitcoin, Peel turns the spotlight on the potential influence of CBDCs from various nations on the dominance of the U.S. dollar. He points out that CBDCs enable faster cross-border payments without the need for a universal currency like the U.S. dollar. This could diminish the reliance on traditional intermediaries such as SWIFT and established currencies. Data from CBDC Tracker shows that 130 countries, accounting for over 98% of the global GDP, are now in the process of researching or creating CBDCs, a notable increase from only a few years ago.

Peel elaborates on how CBDCs might bring significant innovation to financial services, including the adoption of smart contracts for automated transactions. Such advancements could make programmable money more practical, potentially reducing the world's dependence on dominant currencies and reshaping the financial landscape.

In his discourse on the effects of Bitcoin and CBDCs on the U.S. dollar, Peel also discusses the role of stablecoins. He describes these mostly fiat-pegged digital currencies as the crypto world's "killer app." He underscores the increasing importance of dollar-backed stablecoins, which he believes could profoundly impact the financial sector, especially in terms of international money transfers. Peel posits that these stablecoins are poised to significantly alter the way global financial transactions are conducted, playing a crucial role in the evolving financial world.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.