Morgan Stanley’s global strategist has made a case that bitcoin is making progress towards replacing the U.S. dollar as the world’s reserve currency. “Do not assume that your traditional currencies are the only stores of value, or mediums of exchange, that people will ever trust,” he warned governments.
Bitcoin Is on Its Way to Becoming the World’s Reserve Currency
Morgan Stanley Investment Management’s chief global strategist and head of emerging markets, Ruchir Sharma, published an opinion piece in the Financial Times on Wednesday. He explained how bitcoin is making progress towards replacing the U.S. dollar and becoming the world’s reserve currency.
The Indian investor began by recalling that when the coronavirus pandemic hit, the U.S. dollar was the world’s “reserve currency,” noting that it has been one for 100 years while other previous reserve currencies lasted about 94 years on average. “That would have been reason to question how much longer it could continue, but for one caveat: the lack of a successor,” Sharma described, noting some contenders that fall short, such as the euro or China’s renminbi.
“US officials were thus confident that, in response to the Covid-19 lockdowns, they could print the dollar in limitless quantities without undermining its reserve currency status, allowing the country to keep running large deficits without apparent consequences,” the strategist continued, elaborating:
But a new class of contenders is emerging: cryptocurrencies … cryptocurrencies such as bitcoin are being pitched by their champions as decentralised, democratic alternatives.
While pointing out that there are bitcoin skeptics, including those who prefer gold, Sharma said, “many people have bought bitcoin in bulk,” as they fear that “central banks led by the US Federal Reserve are debasing the value of their currencies.” This has boosted the price of bitcoin which has “more than quadrupled…