Why would they be, right? Major investment bank Morgan Stanley believes that central bank digital currencies (CBDC) are not a threat to the existence of cryptocurrencies.
The bank is of the view that both types of digital currencies can coexist, and the reason being that they each serve different purposes and have different appeals. In other words, the uses and appeals of these two types of digital coins are different.
Chief economist at Morgan Stanley, Chetan Ahya, and other analysts at the bank discussed the impact of CBDCs on Bitcoin and other cryptocurrencies in a report published last week.
“Cryptocurrencies will still exist, as they continue to serve other use cases … For instance, some cryptocurrencies can function as a store of value … as some segments of the public do not place their full faith in fiat currencies.”
The analysts explained that cryptocurrencies can both be a store of value, similar to gold, and a speculative asset. And as far as Bitcoin is concerned, most people go with the former, with institutional investors in particular seeing the world’s most popular crypto as a store of value.
Speaking of investors, though, many are gravitating towards Bitcoin and other cryptocurrencies, and Morgan Stanley analysts are of the view that the unprecedented monetary and fiscal policy response to the pandemic has got a lot to do with that.
In contrast, the report claims that’s government backed digital currencies pose the biggest risk to stablecoins.
A growing number of central banks have shown an increased interest in issuing their own digital currencies. The Bank of International Settlement (BIS) says that 86% of the world’s central banks are studying digital currencies in varying stages.
Morgan Stanley believes that CBDCs will be quite different from cryptocurrencies, as it is unlikely that they will use blockchain.
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