By Michael Scott
Andrew Peel, Morgan Stanley’s digital assets head, cautions that there is a ‘paradigm change’ in the perception and utilization of digital assets.
Morgan Stanley, a Wall Street investment bank, cautions that a ‘paradigm shift’ in the perception as well as utilization of central bank digital currencies (CBDCs) and digital assets like Bitcoin might be a threat to US dollar supremacy as an international currency.
Analyst Project Bitcoin to Attain Extraordinary Growth
In a January 12 investment note, Andrew Peel, the bank’s head of digital assets, noted that the United States dollar comprises nearly 60% of the international foreign exchange reserves.
However, a paradigm change in the international understanding and utilization of digital assets’ might oppose the dollar’s leadership. According to Peel, the United States Securities and Exchange ratification of numerous spot Bitcoin exchange-traded funds (ETFs) in the nation has considerably hastened this shift.
Weekly inflows into the new products have topped $1.18B. Besides, Peel considered Bitcoin’s ‘outstanding’ international adoption over the last 15 years as proof of its consistent growth.
Significance of CBDC
He noted that 106 million persons globally hold this cryptocurrency. Besides, he said that Bitcoin ATMs are present in more than 80 nations. In the meantime, other nations’ central bank digital currencies might also affect the supremacy of the dollar, which would ensure quick payments across borders in the absence of a common currency.
‘Central bank digital currencies are capable of creating a unified cross-border payments standard, which might reduce dependence on traditional intermediaries such as SWIFT and the utilization of leading cryptocurrencies, for instance, the dollar. ‘
Data from the Atlantic Council CBDC Tracker shows that 130 nations, comprising more than 98% of international gross domestic product (GDP), are evaluating or creating central bank digital currencies. This marks a massive improvement from just some years ago.
Importance of Promoting Financial Inclusivity In the US
Peel also noted that central bank digital currencies can ensure considerable innovation in financial services. An example includes the utilization of smart contracts to automate payments. Ultimately, the programmable money concept will become a practical reality.
While central bank digital currencies and Bitcoin might affect the dominance of the United States dollar, Peel claimed that stablecoins might be a more useful inclusion to international finance. He used the term ‘killer app’ to describe the mainly fiat-pegged stablecoins.
The dollar-supported stablecoin’s rising significance will have a major effect on the financial sector, possibly restructuring the movement of funds across borders.’