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- The US dollar accounts for almost 60% of the world’s foreign currency reserves.
- The report went on to say that the EU is trying to increase the Euro’s prominence.
In light of worries over de-dollarization, renowned financial institution Morgan Stanley expects stablecoins to support the US dollar (USD). In light of the proliferation of digital currencies, this report examines the threats that the US dollar faces. It also highlighted international initiatives aimed at promoting de-dollarization.
Despite the United States’ 25% contribution to global GDP, Morgan Stanley notes that the dollar is now under pressure. The US dollar accounts for almost 60% of the world’s foreign currency reserves; de-dollarization may cause that percentage to fall.
The report went on to say that the EU is trying to increase the Euro’s prominence in global commerce. A possible threat to the USD might come from the EU’s present focus on energy trades and other commodities.
Furthermore, Morgan Stanley pointed out that USD might be challenged by the growing popularity of Bitcoin and the rise of CBDCs. A number of nations have recently begun working on CBDC development in response to regulatory concerns.
Stablecoins to the Rescue
In spite of these setbacks, stablecoins might save USD, according to Morgan Stanley. Stablecoins, especially those tied to the dollar, have seen tremendous development and popularity, according to the organization. One of the main reasons stablecoins are becoming more important, according to the report, is its multi-use beyond trade.
According to the report, dollar-backed stablecoins would change the way money moves across countries and have a huge influence on the financial industry.
In addition, stablecoins, according to Morgan Stanley, won’t be able to unseat the US dollar. On the other hand, the dollar’s dominance in the global currency market may be solidified if traditional financial institutions continue to evolve and grow adoption of stablecoins.
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