October 13, 2025 by Rafik Omar, Vinden Wylde, The Conversation
Collected at: https://techxplore.com/news/2025-10-digital-currencies-banking-future-money.html
Throughout history, control over money has been one of the most powerful levers of state authority. Rulers have long understood that whoever issues and manages the currency also commands the economy and, by extension, society itself.
In Tudor England, Henry VIII’s “Great Debasement” between 1542 and 1551 reduced the silver content of coins from more than 90% to barely one-third, while leaving the king’s portrait shining on the surface, of course. The policy financed wars and courtly extravagance, but also fueled inflation and public distrust in coinage.
Centuries earlier, Roman emperors had resorted to similar tricks with the denarius, steadily reducing its silver content until by the 3rd century AD, it contained little more than trace amounts, undermining its credibility and contributing to economic instability.
Outside Europe, the same pattern held. In 11th-century China, the Song dynasty pioneered paper money, extending state control over taxation and trade. This was a groundbreaking innovation, but later dynasties such as the Ming over-issued notes, sparking inflation and loss of trust in the currency.
Such episodes underline a timeless truth: money is never neutral. It has always been an instrument of governance—whether to project authority, consolidate control or disguise fiscal weakness. The establishment of central banks, from the Bank of England in 1694 to the US Federal Reserve in 1913, formalized that authority.
Today, the same story is entering a new digital chapter. As Axel van Trotsenburg, senior managing director of the World Bank, wrote in 2024: “Embracing digitalization is no longer a choice. It’s a necessity.” By this he meant not simply switching to online banking, but making the currencies we use, and the mechanisms for regulating it, entirely digital.
Just as rulers once clipped coins or over-printed notes, governments are now testing how far digital money can extend their reach—both within and beyond national boundaries. Of course, different governments and political systems have very different ideas about how the money of the future should be designed.
In March 2024, then-former President Trump, back on the hustings trail, declared: “As your president, I will never allow the creation of a central bank digital currency.” It was a campaign moment, but also a salvo in a much larger battle—not just over the future of money, but who controls it.
In the US, the issuance of currency—whether in the form of physical cash or digital bank deposits and electronic payments—has traditionally been monopolized by the Federal Reserve (more commonly known as “the Fed”), a technocratic institution designed to operate independently from the elected government and houses. But Trump’s hostility toward the Fed is well-documented, and noisy.
During his second term, Trump has publicly berated the Fed’s chair, Jerome Powell, calling him “a stubborn MORON” over his interest rate policies, and even floating the idea of replacing him. Trump’s discomfort with the Fed’s autonomy echoes earlier populist movements such as President Andrew Jackson’s 1830s crusade against the Second Bank of the United States, when federal financial elites were portrayed as obstacles to democratic control of money.
In March 2025, when Trump issued an executive order establishing a Strategic Bitcoin Reserve, he signaled the opening of a new front in this institutional battle. By incorporating bitcoin into an official US reserve, the world’s largest economy is, for the first time, sanctioning its use as part of state financial infrastructure.
For a leader like Trump, who has consistently sought to break, bypass or dominate independent institutions—from the judiciary to intelligence agencies—the idea of replacing the Fed’s influence with a state-aligned crypto ecosystem may represent the ultimate act of executive assertion.
Such a step reframes bitcoin as more than an investment fad or criminal fallback; it is being drawn into the formal monetary system—in the US, at least.
America’s crypto future?
Bitcoin is, by a distance, the world’s most valuable cryptocurrency (at the time of writing, one coin is worth just shy of US$120,000) having established a record high in August 2025. Like gold, its value is ensured in part by its finite supply, and its security by the blockchain technology that makes it unhackable.
For most who buy bitcoins, its key value is not as a currency but a speculative investment product—a kind of “digital gold” or high-risk stock that investors buy hoping for big returns. Many people have indeed made millions from their purchases.
But now, thanks in particular to Trump’s aggressively pro-crypto, anti-central bank approach, bitcoin’s potential role as part of a new form of state-controlled digital currency is in the spotlight like never before.
Trump’s framing of bitcoin as “freedom money” reflects its traditional sales pitch as being censorship-resistant, unreviewable, and free from state control. At the same time, his blurring of public authority and private financial interest, when it comes to cryptocurrencies, has raised some serious ethical and governance concerns.
But the crucial innovation here is that Trump is not proposing a truly libertarian system. It is a hybrid model: one where the issuance of money may become privatized while control of the US’s financial reserve strategy—and associated political and economic narratives—remains firmly in state hands.
This raises provocative questions about the future of the Federal Reserve. Could it be sidelined not through legal abolition, but by the growing relevance of parallel monetary systems blessed by the executive? The possibility is no longer far-fetched.
According to a 2023 paper published by the Bank for International Settlements, a powerful if little-known organization that coordinates central bank policy globally: “The decentralization of monetary functions across public and private actors introduces a new era of contestable monetary sovereignty.”
In plain English, this means money is no longer the sole domain of states. Tech firms, decentralized communities and even AI-powered platforms are now building alternative value systems that challenge the monopoly of national currencies.
Calls to diminish the role of central banks in shaping macroeconomic outcomes are closely tied to the rise of what the University of Cambridge’s Bennett School of Public Policy calls “crypto populism”—a movement that shifts legitimacy away from unelected technocrats towards “the people,” whether they are retail investors, cryptocurrency miners or politically aligned firms.
Supporters of this agenda argue that central banks have too much unchecked power, from manipulating interest rates to bailing out financial elites, while ordinary savers bear the costs through inflation or higher borrowing charges.
In the US, Trump and his advisers have become the most visible proponents, tying bitcoin and also so-called “stablecoins” (cryptocurrencies designed to maintain a stable value by being pegged to an external asset) to a broader populist narrative about wresting control from elites.
The emergence of this dual monetary system is causing deep unease in traditional financial institutions. Even the economist-activist Yanis Varoufakis—a long-time critic of central banks—has warned of the dangers of Trump’s approach, suggesting that US private stablecoin legislation could deliberately weaken the Fed’s grip on money, while “depriving it of the means to clean up the inevitable mess” that will follow.
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