Morgan Stanley Exec: Bitcoin Slowly Replacing US Dollar as Reserve Currency
Morgan Stanley global strategist, Ruchir Sharma says Bitcoin is making progress towards replacing the US Dollar as the world’s reserve currency.
Sharma, the Chief Global Strategist and head of the Emerging Markets Equity team at Morgan Stanley, cited the lack of global trust in traditional finance, while Bitcoin is gaining in trust and reputation.
Sharma was writing for the Financial Times, warning central bankers they had to change their ways to avoid losing out to Bitcoin.
‘Do not assume that your traditional currencies are the only stores of value, or mediums of exchange, that people will ever trust,’ Ruchir Sharma warned.
The Indian investor referenced the history of the world’s reserve currencies lasting an average of 94 years, while pointing out the dollar had lasted 100 years at the start of 2020.
The US Dollar Has Outstayed Its Welcome As Reserve Currency
Ruchir Sharma believes the only reason the dollar has lasted so long is a lack of a commendable successor, until now. And the speed at which new dollars are being printed is undermining the US Dollar as the reserve currency.
‘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,’ said the Morgan Stanley chief strategist.
‘But a new class of contenders is emerging: cryptocurrencies … cryptocurrencies such as Bitcoin are being pitched by their champions as decentralised, democratic alternatives. … Money printing is likely to continue, even when the pandemic passes. Trusted or not, Bitcoin will gain from widening distrust in the traditional alternatives.’
Ruchir Sharma: Bitcoin is Slowly Replacing The US Dollar as Reserve Currency
With the rise in Bitcoin price this year, and public companies now opting to hold Bitcoin on their balance sheets, it shows how the balance of faith is shifting from the dollar to Bitcoin.
MicroStrategy is leading the way for corporate treasuries adopting a Bitcoin Standard.
To date, the business intelligence firm has spent $475 million buying Bitcoin, and after raising a further $650 million in corporate bonds, MicroStrategy CEO Michael Saylor is going to invest it all in Bitcoin.
Other corporates have followed, and insurance giant MassMutual announced last week it had made a $100 million investment in Bitcoin.
These companies are holding Bitcoin as a store of value, but Ruchir Sharma claims Bitcoin is being used more as a medium of exchange now.
‘Bitcoin is also starting to make progress on its ambition to replace the dollar as a medium of exchange,’ said the Morgan Stanley exec. ‘Today, most bitcoins are held as an investment, not used to pay bills, but that is changing,’
‘This is particularly true in countries where dollars can be hard to come by (such as Nigeria) or the local currency is unstable (Argentina),’ who also touted PayPal’s Bitcoin payments service to its 28 million merchants as evidence to Bitcoin’s growing adoption.
The World is Losing Faith In The Dollar and Adopting a Bitcoin Standard
Bitcoin’s rise is inevitable. Smooth sailing it hasn’t been, and it certainly won’t be going forward either, but governments’ desire for free money can only go one way.
All fiat currencies eventually go to zero, and the US dollar is no different. It has only lasted so long because it’s been easier to manipulate and print more, since coming off the gold standard in 1971.
We’re seeing investing legends such as Stan Druckenmiller and Paul Tudor Jones come out as Bitcoiners, and public companies like MicroStrategy now holding Bitcoin on their balance sheet.
This is both a complete lack of faith in the US dollar and a growing awareness of the world’s soundest money, Bitcoin. And the more governments print money, the more money corporates will move into Bitcoin.
Bitcoin replacing the US dollar as the reserve currency is inevitable. I used to think it would take about 50 years, but with the speed at which the dollar is being debased, it could be by the end of the decade.