Banking giant Morgan Stanley says central bank digital currencies (CBDCs) could help shift the hegemony of the US dollar.
In a new research note, says Andrew Peel, executive director and head of digital asset markets at the bank say that CBDCs are capable of creating a new standard for cross-border payments, reducing the need for the dollar and traditional payment structures.
Says Peel,
“As CBDCs become more widely adopted and technologically advanced, they have the potential to establish a uniform standard for cross-border payments, which could reduce dependence on traditional intermediaries such as SWIFT and the use of dominant currencies such as the dollar .
Additionally, CBDCs can enable significant innovation in financial services, such as the use of smart contracts to automate payments, making the concept of programmable money a practical reality.”
The analyst also says that US dollar-pegged stablecoins “will have a profound impact” on the global financial sector and have the potential to reshape the way money moves across borders. Peel suggests stablecoins may be crypto’s ‘killer app’.
“Rather than challenge the dollar’s dominance, their continued evolution and growing acceptance by mainstream financial entities underscore their potential to significantly change the landscape of global finance and in effect cement the dollar as the dominant global currency…
As the world adapts to these technological advances, understanding the interplay and nuances between traditional fiat currencies, Bitcoin, e-money, and stablecoins becomes critical. These dynamics will significantly impact the future of international trade and finance and potentially reshape the global economic and financial landscape.”
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