Amid the ongoing de-dollarization plans from the BRICS economic alliance, Wall Street juggernaut Morgan Stanley says that Bitcoin and continued Central Bank Digital Currency (CBDC) development has the potential to replace the US Dollar.
Indeed, the firm pointed to the de-dollarization potential of digital assets. Specifically, the firm has explored the idea in its new “Digital (De)Dollarization?” report. There, it highlighted how the influence of the US Dollar on a global scale could be threatened. Moreover, how that could stem from the influx of digital assets within the global economy.
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Morgan Stanley Sees De-Dollarization Potential in Digital Assets
For much of the last year, the BRICS alliance has firmly embraced the idea of de-dollarization. Somewhat forced through Western sanctions, the bloc has not been shy about its efforts. Moreover, it has consistently pushed for the promotion of its local currencies to provide an alternative to the greenback.
However, one financial services firm has highlighted what currencies could be able to threaten the dollar dominants. Indeed, Morgan Stanley has said that Bitcoin and CBDC development maintain the potential to eventually replace the US Dollar on a global scale.
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The report centrally focuses on the ascension of digital currencies. Specifically, how that can challenge the overall dollar dominance on an international basis. Subsequently, it notes that the global financial system has firmly embraced CBDC development. Moreover, Morgan Stanley notes that stablecoins have also ascended in prominence. The dollar-pegged asset accounted for $10 trillion in payments in 2022.
More than 111 countries have embraced a digitized version of their national currencies. In the case of countries like China, their digital yuan has had immense success. Additionally, fellow BRICS nation BRazil has seen their DREX provide some promising results.
Morgan Stanley predicts that the continued rise of these CBDCs for cross-border payments could work to eliminate the prevalence of SWIFT. Specifically, the financial intermediary is heavily used in the transaction of dollars. Conversely, the BRICS bloc has been seeking to eliminate the use of the SWIFT payment system with its iteration.
The BRICS Currency Dark Horse
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Amid the growing use of Bitcoin, as seen in the recent approval of Spot Bitcoin ETFs in the United States, and CBDCs, one forgotten challenger is the developing BRICS currency. Indeed, the BRICS native alternative is said to have been in development for much of 2023.
There have been some questions regarding its functionality, with some predicting it to be a blockchain-based digital asset. Subsequently, that could provide yet another challenger to the US Dollar. Specifically, it would be a challenging currency that could benefit from the digital revolution.
Alternatively, the purchase of gold by central banks has shown yet another diversification attempt by global central banks. Not limited to the BRICS alliance, the world has been seeking to lessen its exposure to the greenback. Ultimately, Morgan Stanley could be right in its perspective. Digital assets could ascend to a position that usurps the global power of the dollar.