Morgan Stanley Predicts Bitcoin & CBDC to Supplant US Dollar: BRICS Report

• Morgan Stanley Foresees Potential for Bitcoin and CBDCs to Replace US Dollar amidst BRICS De-dollarization Plans
• The De-dollarization Potential of Digital Assets
• The Impact of Digital Currencies on Dollar Dominance
• The BRICS Currency: A Possible Contender

Morgan Stanley Foresees Potential for Bitcoin and CBDCs to Replace US Dollar amidst BRICS De-dollarization Plans

Digital assets like Bitcoin$42,260 -0.64% and Central Bank Digital Currencies (CBDC) have the potential to replace the US Dollar in the global economy, according to recent analysis by leading investment bank, Morgan Stanley. The Wall Street titan suggests that these digital currencies could play a significant role in ongoing de-dollarization strategies, specifically those being enacted by the BRICS economic alliance. The bank's views are documented in its latest report, Digital (De)Dollarization?

The De-dollarization Potential of Digital Assets

Over the past year, the BRICS nations have been committed to de-dollarization, seeking to reduce their reliance on the US Dollar due to Western sanctions. Their strategies have involved the promotion of their own local currencies as alternatives. However, it is the potential of digital currencies like Bitcoin and CBDCs to challenge dollar dominance that has drawn the attention of Morgan Stanley. The bank believes these digital assets could potentially take over the role of the US Dollar in the global economy.

The Impact of Digital Currencies on Dollar Dominance

The report by Morgan Stanley focuses considerably on the rise of digital currencies and their potential to challenge dollar dominance. It highlights the global financial system's firm acceptance of CBDC development, and notes the increasing prominence of stablecoins, dollar-pegged assets that accounted for $10 trillion in payments in 2022.

Digital versions of national currencies have been adopted by over 111 countries, with notable successes seen in China with their digital yuan, and in Brazil with the DREX from the BRICS nations. Morgan Stanley predicts that the continued adoption of these CBDCs for cross-border payments could eventually replace the SWIFT payment system, which is currently heavily used for dollar transactions.

The BRICS Currency: A Possible Contender

While Bitcoin and CBDCs are gaining traction, another potential challenger to the US Dollar is the developing currency of the BRICS nations. This proposed alternative has been in development throughout 2023, with predictions indicating it could be a blockchain-based digital asset. If this proves true, it would represent another digital competitor to the US Dollar, capitalizing on the momentum of the digital revolution.

Additionally, there has been an observable increase in the purchase of gold by central banks, suggesting another diversification strategy being adopted by global central banks in an effort to lessen their exposure to the US Dollar. If Morgan Stanley's analysis is accurate, digital assets could ascend and eventually challenge the global dominance of the US Dollar.

Edited by Jonathan Stoker