Can cryptocurrencies replace the U.S. dollar? See what Morgan Stanley has to say

Author: Will Canny, CoinDesk; Compiler: Songxue, Golden Finance

Wall Street giant Morgan Stanley (MS) said in a report last week that due to changes in the geopolitical situation and the country's growing twin deficits, the dollar's dominance as the linchpin of the international financial system is increasingly being questioned.

Cryptocurrencies, while still in their early stages, have the potential to weaken and strengthen the U.S. dollar’s ​​dominance of global finance, the bank said.

Andrew Peel, a director at Morgan Stanley, wrote: “Recent growth in interest in digital assets such as Bitcoin (BTC), stablecoin trading volume The growth of digital currency and the prospect of central bank digital currency (CBDC) have the potential to significantly change the monetary landscape."

Peel said that U.S. monetary policy coupled with economic sanctions has forced some countries to look for U.S. dollars. Alternatives, adding that “a clear shift away from reliance on the U.S. dollar is evident, while stimulating interest in digital currencies such as Bitcoin, stablecoins, and CBDC.”

On the other hand, he noted that stablecoins pegged to the U.S. dollar are also important because they may actually emphasize demand for fiat currencies. "Their continued development and growing acceptance by mainstream financial entities underscores their potential to significantly transform the global financial landscape and, in effect, reinforce the U.S. dollar's status as the dominant global currency," Peele wrote.< / p>

However, the growing popularity of stablecoins has sparked widespread interest in CBDC. As these digital currencies gain wider acceptance and technology advances, "they have the potential to establish unified standards for cross-border payments, which could reduce reliance on intermediaries such as SWIFT and the use of dominant currencies such as the U.S. dollar," the report adds .