Morgan Stanley Expects Stablecoins To Back USD Amid De-dollarization Risks

Morgan Stanley, a prominent financial institution, anticipates stablecoins to back the U.S. dollar (USD) amidst concerns of de-dollarization. The report highlights the challenges USD is exposed to due to the rise of digital currencies. In addition, it underscored the global efforts to promote de-dollarization.
EU & China Intensify De-dollarization Risks
Morgan Stanley underscores the current scrutiny the U.S. dollar faces despite the U.S. contributing 25% to the global GDP. Moreover, USD constitutes nearly 60% of global foreign exchange reserves and de-dollarization could lead to a reduced share. The report noted that recent U.S. monetary policies and strategic economic sanctions have led some nations to explore alternatives.
In addition, the document stated that the European Union is making efforts to boost Euro’s role in international trade. The EU is currently targeting energy transactions and key commodities, posing a potential challenge to the USD. Additionally, China’s advancement of the Chinese Yuan (CNY) through initiatives like the Cross-Border Interbank Payment System (CIPS) is noted as a significant contender against the dollar-centric Clearing House Interbank Payments System (CHIPS).
In addition, Morgan Stanley noted that the increased adoption of Bitcoin (BTC) and the emergence of Central Bank Digital Currencies (CBDCs) could threaten USD’s position. Recently, countries like India, Brazil, China, and the U.K. have initiated efforts to develop CBDCs amid regulatory concerns.
Also Read: TrueUSD Stablecoin Depegs As Whales Dump TUSD Amid Regulatory Woes
Stablecoins To Emerge As USD’s Savior
Despite these challenges, Morgan Stanley emphasizes that stablecoins could come to USD’s rescue. The institution highlighted the remarkable growth and adoption of stablecoins, particularly those pegged to the U.S. dollar. The report cites stablecoins’ utility beyond trading as a key factor contributing to their rising importance.
The document added, “Dollar-backed stablecoins are set to have a profound impact on the financial sector, potentially reshaping how money is moved across borders.” In addition, Morgan Stanley acknowledged the exponential growth of dollar-linked stablecoins. It noted that processing transactions rose close to $10 trillion on public blockchains in 2022, emerging as a rival to traditional payment giants like PayPal and Visa.
Furthermore, Morgan Stanley suggested that stablecoins wouldn’t challenge the USD’s dominance. Instead, the “continued evolution and growing acceptance” of stablecoins by conventional financial agencies could reinforce the U.S. dollar as the dominant global currency. Additionally, Morgan Stanley views stablecoins as a critical catalyst in significantly altering the landscape of global finance.
Also Read: Circle CEO Jeremy Allaire Predicts U.S. Stablecoin Laws in 2024
- Flare Network Surpasses $43M in Bridged XRP, Expert Predicts Breakout to New ATH
- Bitcoin, Ethereum Drag Broader Crypto Market Lower Ahead of FED Powell Speech
- Breaking: Ripple Partners With Bahrain’s Fintech Bay in Push for RLUSD Adoption
- XRP News: Why Whales Sold 440M Coins in a Month Despite ETF Launch Buzz
- Just In: DeFi Dev Corp Launches Japan’s First Solana Treasury Company, SOL Price Reacts
- Bitcoin Price Prediction as US Govt. Shutdown Extends- What’s Next for BTC?
- Solana Price Megaphone Points to a Parabolic Move as SOL Treasuries Near $3B
- XRP Price Prediction Amid ETF Approval Roadblock as Analyst Warns of $2.72 Dip
- Binance Coin Price Prediction If It Surpasses Bitcoin Marketcap— Is $3000 Possible in 2025?
- ASTER vs HYPE Price Analysis – Which Perp DEX Token Looks Poised to Dominate Q4 Performance?
- Ethereum Price Could Soar to $6,500 as BlackRock’s ETF Nears $20B Milestone