Morgan Stanley, a large investment bank, believes that central bank digital currencies will not pose a threat to the existence of cryptocurrencies. The bank believes that these two digital currencies can coexist because they have different purposes and have different appeals.
Cryptocurrency and CBDC can coexist
Morgan Stanley analysts, including chief economist Chetan Ahya, discussed the impact of central bank digital currency (CBDC) on Bitcoin and other cryptocurrencies in a report released last week. They wrote:
Cryptocurrencies will continue to exist because they will continue to serve other use cases…for example, certain cryptocurrencies can be used as a repository of value…because some members of the public do not fully believe in fiat currencies.
The analyst explained that the use and attractiveness of central bank digital currencies and encrypted currencies are different. They added that cryptocurrencies can both store value like gold and can be used as speculative assets.
More and more people say that Bitcoin is a store of value, including U.S. Senator Cynthia Lummis who supports Bitcoin and Dallas Federal Reserve Bank President Rob Kaplan.
Regarding the question of why investors are becoming more and more interested in Bitcoin and other cryptocurrencies, Morgan Stanley analysts describe:
Investor interest in cryptocurrencies has grown along with unprecedented monetary and fiscal policy responses to the pandemic.
In contrast, Morgan Stanley stated in the report that government-backed digital currencies may pose the greatest risk to stablecoins.
More and more central banks are becoming more and more interested in issuing their own digital currencies. The Bank for International Settlements (BIS) stated that 86% of the world’s central banks are studying digital currencies at different stages.
Morgan Stanley believes that CBDC is very different from cryptocurrencies because they are unlikely to use blockchain. The European Central Bank (ECB) also stated that CBDC has nothing to do with cryptocurrencies. The bank considers cryptocurrencies to be speculative assets, not actual currencies.
Do you think cryptocurrency and central bank digital currency can coexist? Let us know in the comments section below.
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