Money in the 2020s is in some respects very different than money in the 1920s, but as the Bank for International Settlements notes, the world seems intent on unlearning some important lessons. Who issues money, and how it is regulated, matter. Poorly regulated privately issued money is a recipe for disaster. Yet the Trump administration, in particular, seems intent on bringing “stablecoin” into the mainstream. Stablecoin are digital tokens that can be held in a digital wallet and used for payment on blockchains. Its defining characteristic is that the issuer promises it will be redeemed for an equivalent sum of whatever the token was originally issued in exchange for (e.g. if you provide $1 to get 1 stablecoin token denominated as a $1 token, the issuer promises to return $1 to you if you return your token). The dominant version of stablecoin are “asset backed” and “full reserve”. This simply means that the issuer takes the currency they receive and buys assets that it retains until needed to meet redemption requirements. In theory, high quality liquid assets stand behind the promise of redemption. There are currently around $275bn in issued stablecoins.
Putting aside the standard economic arguments for new forms of digital money (ledger-based secure settlement without the need for expensive intermediaries and infrastructure, use of smart contracts, scope for programmability etc.), a variety of motives and interests seem to lie behind the Trump administration’s enthusiasm. Widespread adoption of stablecoin helps bring cryptocurrency into the mainstream and the Trump family, and many of their backers, are heavily invested in the sector. According to a June 2025 report in the Financial Times, Trump’s annual financial disclosure to the US Office of Government Ethics, revealed that he held 15.75bn governance tokens in World Liberty Financial and received $57.4m in income. Despite the collapse in value of the Trump meme coin ($TRUMP), according to Reuters, the Trump family made more than $800m from crypto assets in the first half of 2025.
Beyond possible base motives, however, current trends in stablecoin may well work to reinforce the status of the US$ as global reserve currency. Private money may well, therefore, have monetary sovereignty and geopolitical consequences. According to the Atlantic Council, in mid-2025 98% of stablecoin were US “dollar pegged”, and 80% of transactions took place outside of the US. If this dominance persists as stablecoin increases in scale and volume, then there will be increased demand for dollar denominated assets to populate stablecoin reserves, starting with US Treasury securities, given these are the most widespread and safest $ assets. Growth in stablecoin should thus mean lower funding costs for the US Treasury (insofar as higher demand for the securities translates into lower offered rates at point of issuance). Demand for other countries’ securities, meanwhile, may fall and since most states have fiscal rules that require them to issue securities to cover deficit spending (the Debt Management Office, an agency of the Treasury, fulfils this function in the UK), it is likely that costs of “borrowing” will rise (though MMT advocates may dispute that this issuance is necessary). Heavier constraints on government spending (real or imagined) are an obvious worry at a time of climate emergency, when massive new investment is required for a green transition. The additional problem here is that, especially in weaker economies that lack a trusted central bank and strong currency, more of payments may start to occur in a foreign currency form (via stablecoin). This new form of the old problem of “dollarisation” could impact the development of strong domestic institutions in the Global South.
In any case, there is currently a struggle underway to shape the future of money issuance, banking and finance. The BIS prefers a future that iterates from the status quo of central banks, commercial bank money issuance and collateralisation via Treasury securities. Others hope for a dominant role for retail central bank digital currency (CBDC). But the Trump administration seems intent on supressing CBDC and privileging stablecoin via its GENIUS Act, Digital Asset Market Clarity Act, and Anti-CBDC Surveillance State Act – to which one might also add the normalization effects of the US Strategic Bitcoin Reserve, and Trump’s executive order directing a loosening of eligible 401(k) investments. Stablecoin, to be clear, are not stable. They are the worst choice of those available. The world can’t afford the marriage of kleptocracy and technology. It needs a different approach to money or maybe none at all.
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