FameEX Hot Topics | Morgan Stanley Warns Bitcoin's Significant Growth and CBDCs Pose Threat to US Dollar Dominance

Morgan Stanley's Head of Digital Assets, Andrew Peel, has issued a warning about a potential "paradigm shift" in the global perception and utilization of digital assets like Bitcoin and central bank digital currencies (CBDCs), which could challenge the longstanding dominance of the U.S. dollar as the world's primary currency. In a recent investment note dated January 12, Peel delves into how this shift could affect the U.S. dollar's leadership position, especially as it currently constitutes about 60% of global foreign exchange reserves.

Peel points to the recent approval of a series of spot Bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC) as a significant catalyst for this change. The inflow into these new products has been substantial, with weekly contributions exceeding $1.18 billion. This, combined with Bitcoin’s impressive global adoption over the past 15 years, illustrates its continuous growth. Peel highlights that approximately 106 million people worldwide now own Bitcoin, and there are Bitcoin ATMs in over 80 countries, showcasing its expanding influence.

In addition to Bitcoin, Peel draws attention to the potential impact of CBDCs from various countries on the U.S. dollar's supremacy. CBDCs, which facilitate quick cross-border payments without the need for a common currency like the U.S. dollar, could reduce dependence on traditional financial intermediaries such as SWIFT and dominant currencies. CBDC Tracker's data indicates that 130 countries, representing over 98% of the global GDP, are exploring or developing CBDCs – a significant jump from just a few years ago.

Peel further explains that CBDCs could usher in substantial innovation in financial services. This includes the use of smart contracts for automated payments, bringing the idea of programmable money closer to reality. He posits that these innovations could lessen the reliance on dominant currencies and reshape the financial landscape.

While discussing the impact of Bitcoin and CBDCs on the U.S. dollar, Peel also sheds light on stablecoins. He describes these largely fiat-pegged digital currencies as the "killer app" of the crypto world. Peel emphasizes the growing significance of dollar-backed stablecoins, suggesting they could revolutionize the financial sector, particularly in how money is moved across borders. According to him, these stablecoins could play a pivotal role in redefining global financial transactions.

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