Morgan Stanley executive heading digital assets Andrew Peel is warning of a likely paradigm shift in perception. The crypto head at the Manhattan-based investment bank considers that growth in digital assets usage threatens to erode the US dollar leadership.
Peel observes that sustained paradigm shifts in the central bank’s digital currencies (CBDCs) and Bitcoin usage are gradually threatening the United States’ dollar dominance.
Morgan Stanley Warns of Crypto Threat to US Dollar Leadership
The Wall Street investment bank warned on Friday, January 12, that a paradigm shift towards cryptos threatens to breach the US dollar leadership that currently approximates 60% of global foreign exchange reserves.
Peel notes that the paradigm shift is riding on the significant acceleration by the US Securities and Exchange Commission’s (SEC) decision to approve 11 spot Bitcoin exchange-traded funds applications. The move by the Gary Gensler-chair securities watchdog triggered weekly inflows into the newly approved spot Bitcoin ETF testing $1.18 billion.
Peel reflected on the exceptional global adoption of Bitcoin over the last 15 years. The period is charcterized by continual growth as over 106 million individuals currently hold the crypto. Besides, the Morgan Stanley executive indicates that Bitcoin ATMs have expanded their geographical presence to 80 countries.
CBDCs to End Reliance on Common Currency in Cross-Border Payments
Peel illustrated that many countries have advanced their CBDC projects poised to erode the dollar dominance. The executive indicated that CBDCs promise to expedite cross-border payments without reliance on common currency.
Peel added that CBDCs harbor the inherent potential to establish the unified standard applicable to execute cross-border payments. The investment note warns that the widespread implementation of CBDCs could erode the reliance on conventional intermediaries, including the dominant fiat currencies and SWIFT, to execute cross-border remittances.
The warning issued by Morgan Stanley of the looming CBDCs threat aligns with the revelation by Atlantic Council CBDC Tracker data that over 130 countries are actively considering digital currencies. The countries that account for 98% of the global gross domestic product (GDP) admit exploring and developing CBDCs. The number marks a sudden increase in the countries pursuing CBDC projects.
Peel disclosed that CBDCs are capable of facilitating significant innovation across financial services. In particular, it could expedite smart contract implementation to automate payments. Also, CBDCs can facilitate the adoption of programmable money a reality.
Stablecoins to Reshape Cross-Border Funds Movement
Although the CBDCs and Bitcoin pose the greatest threat to ending the dollar dominance, Peel hailed stablecoins as a facilitative addition to the global finance ecosystem. The executive labeled the fiat-pegged stablecoins as the inevitable crypto’s killer application.
Peel projected that the dollar-backed stablecoins would witness increased importance, thereby leaving a profound impact across the financial sector. The widespread adoption amid looming stablecoins laws could reshape the cross-border movement of money.
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