Amid the BRICS economic alliance’s ongoing dedollarization plans, Wall Street giant Morgan Stanley says Bitcoin and the continued development of central bank digital currency (CBDC) have the potential to replace the dollar American.
Indeed, the company highlighted the dedollarization potential of digital assets. More specifically, the company explored the idea in its new project “Digital (De)Dollarization? ” report. There, he highlighted how the US dollar’s influence globally could be under threat. Furthermore, how could this come from the influx of digital assets within the global economy?
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Morgan Stanley sees dedollarization potential in digital assets
For much of the last year, the BRICS alliance has firmly embraced the idea of dedollarization. Somewhat constrained by Western sanctions, the bloc did not hesitate to make efforts. In addition, it has always insisted that its local currencies be promoted as an alternative to the greenback.
However, a financial services company has highlighted which currencies could threaten dollar dominants. Indeed, Morgan Stanley has stated that the development of Bitcoin and CBDCs retains the potential to eventually replace the US dollar on a global scale.
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The report primarily focuses on the rise of digital currencies. More specifically, how this can challenge the global dominance of the dollar on an international basis. Subsequently, he notes that the global financial system has firmly embraced the development of CBDCs. Additionally, Morgan Stanley notes that stablecoins have also grown in importance. The dollar-pegged asset accounted for $10 trillion in payments in 2022.
More than 111 countries have adopted a digital version of their national currency. In the case of countries like China, their digital yuan has been immensely successful. Additionally, Brazil, a BRICS member country, has seen its DREX provide promising results.
Morgan Stanley predicts that the continued rise of these CBDCs for cross-border payments could help eliminate the prevalence of SWIFT. Concretely, the financial intermediary is widely used in dollar transactions. Conversely, the BRICS bloc seeks to eliminate the use of the SWIFT payment system with its iterative version.
BRICS Dark Horse Currency
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Amid the growing use of Bitcoin, as evidenced by the recent approval of US Spot Bitcoin ETFs and CBDCs, a forgotten challenger is the developing BRICS currency. Indeed, the native BRICS alternative would have been in development for much of 2023.
Some questions have been raised regarding its functionality, with some predicting that it would be a blockchain-based digital asset. Subsequently, this could constitute another challenger for the US dollar. More precisely, it would be a stimulating currency that could benefit from the digital revolution.
Alternatively, the purchase of gold by central banks demonstrated a further attempt at diversification by global central banks. Beyond the BRICS alliance, the world is seeking to reduce its exposure to the greenback. Ultimately, Morgan Stanley might be right in its view. Digital assets could reach a position that usurps the global power of the dollar.
reference: watcher.guru