A global currency war similar to what was seen in the 1930s is becoming more likely, according to Morgan Stanley.

Under pressure from the country’s new government, the Bank of Japan raised its inflation target to 2 percent and announced an open-ended commitment to purchase assets.

That shift to devalue the yen in order to boost exports and revive its economy was “a game changer,” Morgan Stanley stated in a research note, according to CNBC. Japan’s move brings the central banks in advanced countries closer to “competitive depreciation,” which is “one step closer to a currency war.”

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Economists at Morgan Stanley see parallels between now and the 1930s.

Nation’s that moved early to drop the gold standard and devalue their currencies to increase exports benefited the most — at the expense of other nations in a beggar-thy-neighbor policy, says Morgan Stanley economist Manoj Pradhan, according to CNBC.

“Similarly, it is the domestic agenda that could drive competitive depreciation today,” he said.

As the yen depreciates, an increase in Japanese exports will detract market share from other exporters, he warned. Other central banks, such as the Federal Reserve and European Central Bank, may respond be devaluing their own currencies.

Other countries and their central banks might employ capital controls and “verbal intervention” to intervene.

“While a currency war is not our base case,” Pradhan stated, according to CNBC, “the new-found commitment of Japan’s policymakers does raise the risk of retaliatory action to keep the yen weak.”

Some emerging markets like Colombia, Mexico, Peru and Chile, he added, have done an about-face to more loose monetary policies.

As in the 1930s, a currency war will have definite winners and losers, he noted.

According to The Wall Street Journal, a currency war has already started.

“I expect the international monetary system to destabilize and collapse,” James Rickards, a financier and author of “Currency Wars: The Making of the Next Global Crisis,” told The Journal. “There will be so much money printing by so many central banks that people’s confidence in paper money will wane, and inflation will rise sharply.”

“Devaluing a currency is like peeing in bed,” a Federal Reserve official told The Journal. “It feels good at first, but pretty soon it becomes a real mess.”

On the other hand, a currency war might stimulate economies and end well.

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