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 fuelled 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, formalised that authority.
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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 digitalisation 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 monopolised 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 signalled 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.
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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 privatised 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 organisation that coordinates central bank policy globally: “The decentralisation 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, decentralised 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.
Weaponisation of the dollar
Some rival US nations also feel deep unease about its approach to money – in part because of what analysts call the “weaponisation of the dollar”. This describes how US financial dominance, via Swift and correspondent banking systems, has long enabled sanctions that effectively exclude targeted governments, companies or individuals from global finance.
These tools have been used extensively against Iran, Russia, Venezuela and others – triggering efforts by countries including China, Russia and even some EU states to build alternative payment systems and digital currencies, aimed at reducing dependency on the dollar. As the Atlantic put it in 2023, the US appeared to be “pushing away allies and adversaries alike by turning its currency into a geopolitical bludgeon”.
Spurred on by these concerns and an increasing desire to delink from the dollar as the world’s anchor currency, many countries are now moving towards creating their own central bank digital currencies (CBDCs) – government-issued digital currencies backed and regulated by state institutions.
While fully live CBDCs are already in use in countries ranging from the Bahamas and Jamaica to Nigeria, many more are in active pilot phases – including China’s digital yuan (e-CNY). Having been trialled in multiple cities since 2019, the e-CNY now has millions of domestic users and, by mid-2024, had processed nearly US$1 trillion in retail transactions.
A key part of Beijing’s ambition is to use the digital yuan as a strategic hedge against dollar-based clearance systems, positioning it as part of a wider plan to reduce China’s reliance on the US dollar in international trade. Likewise, the European Central Bank has framed its digital euro – which entered its preparation phase in October 2023 – as essential to future European monetary sovereignty, stating that it would reduce reliance on non-European (often US-controlled) digital payment providers such as Visa, Mastercard and PayPal.
In this way, CBDCs are becoming a new front in global competition over who sets the rules of money, trade and financial sovereignty in the digital age. As governments rush to build and test these systems, technologists, civil libertarians and financial institutions are clashing over how best to do this – and whether the world should embrace or fear the rise of central bank digital currencies.
Trojan horses for surveillance?
The experience of using a CBDC will be much like today’s mobile banking apps: you’ll receive your salary directly into a digital wallet, make instant payments in shops or online, and transfer money to friends in seconds. The key difference is all of that money will be a direct claim on the central bank, guaranteed by the state, rather than a private bank.
In many countries, CBDCs are being pitched as more efficient tools for economic inclusion and societal benefit. A 2023 Bank of England consultation paper emphasised that its proposal for a digital pound would be “privacy-respecting by design” and “non-programmable by the state”. It would not replace cash but sit alongside it, the BoE suggested, with each citizen allowed to hold up to a capped limit digital pounds (suggested at £10,000-£20,000) to avoid destabilising commercial bank deposits.
However, some critics see CBDCs as Trojan horses for surveillance. In 2019, a report by the professional services network PWC suggested that CBDCs, if unchecked, could entrench executive power by removing intermediary financial institutions and enabling programmable, direct government control over citizen transactions. According to the report, this could mean stimulus payments that expire if not spent within 30 days, or taxes deducted at the moment of transaction. In other words, CBDCs could be tools of efficiency – but also of unprecedented oversight.
A 2024 CFA Institute paper warned that digital currencies could allow governments to trace, tax or block payments in real time – tools that authoritarian regimes might embrace. The Bank for International Settlements (BIS) has called the advent of this “programmable money” inevitable.
Imagine, for example, a parent transferring 20 digital pounds to their child’s CBDC wallet, but with a rule that this money can only be spent on food, not video games. When the child uses it at a supermarket, their payment is programmed so that the retailer’s suppliers and the tax authority are paid instantly (£15 to the shop, £3 to wholesalers, £2 straight to the tax office) with no extra steps. In theory, at least, everyone is happy: the parent sees the child spent the money responsibly, the suppliers are paid immediately, and the retailer’s tax bill is settled automatically.
In technical terms, programmable payments such as this are straightforward for CBDCs. But such a system raises big questions about privacy and personal freedom. Some critics fear that programmable CBDCs might be used to restrict spending on disapproved categories such as alcohol and fuel, create expiry dates for unemployment benefits, or enforce climate targets through money flow limits. The BIS has warned that CBDCs should be “designed with safeguards” to preserve user privacy, financial inclusion and interoperability across borders.
Even well-intentioned digital systems can create tools of surveillance. CBDC architecture choices, such as default privacy settings, tiered access or transaction expiry can all shape the extent of executive control embedded in the system. If designed without democratic oversight, these infrastructures risk institutional capture.
Some CBDC pilots – including China’s e-CNY, the Sand Dollar and the eNaira – have been criticised for omitting clear privacy guarantees, with their respective central banks deferring decisions on privacy protections to future legislation. According to Norbert Michel, director of the Cato Institute’s Center for Monetary and Financial Alternatives and one of the most prominent US voices warning about the risks of CBDCs:
A fully implemented CBDC gives the government complete control over the money going into, and coming out of, every person’s account. It’s not difficult to see that this level of government control is incompatible with both economic and political freedom.
Fears of mission creep
The concerns being raised about central bank digital currencies extend beyond personal payment controls. A recent analysis by Rand Corporation highlighted how law enforcement capabilities could dramatically increase with the introduction of CBDCs. While this could strengthen efforts to stop money laundering and the financing of terrorism, it also raises fears of “mission creep”, whereby the same tools could be used to police ordinary citizens’ spending or political activities.
Concerns about mission creep – the idea that a system introduced for limited goals (efficiency, anti-money laundering) gradually expands into broader tools of control – extend into other areas of digital authoritarianism. The Bennett School has cautioned that without legal and political safeguards, CBDCs risk empowering state surveillance and undermining democratic oversight, especially in an interconnected global system.
It is not anti-technology or overly conspiratorial to ask hard questions about the design, governance and safeguards built into our future money. The legitimacy of CBDCs will hinge on public trust, and that trust must be earned. As has been highlighted by the OECD, democratic values like privacy, civic trust and rights protection must all be integral to CBDC design.
The future of money
Predictably, the public view of what we want our money to look like in future is mixed. The tensions we see between centralised CBDCs and decentralised alternatives reflect fundamentally different philosophies.
In the US, populist rhetoric has found a strong base among cryptocurrency investors and libertarian movements. At the same time, surveys in Europe suggest many people remain sceptical of replacing a central bank’s authority, associating it with stability and trustworthiness.
For the US Federal Reserve, the debate over bitcoin, decentralised finance (“DeFi”) and stablecoins goes to the heart of American financial power. Behind closed doors, some US officials worry that both the unchecked use of stablecoins and a widespread adoption of foreign CBDCs like China’s e‑CNY will erode the dollar’s central role and weaken the US’s monetary policy apparatus.
In this context, Trump’s push to elevate crypto into a US Strategic Bitcoin Reserve carries serious implications. While US officials generally avoid direct comment on partisan moves, their policy documents make the stakes clear: if crypto expands outside regulatory boundaries, this could undermine financial stability and weaken the very tools – from monetary policy to sanctions – that sustain the dollar’s global dominance.
Meanwhile, the Bank of England’s governor, Andrew Bailey, writing in the Financial Times this week, sounded more accommodating of a financial future that includes stablecoins, suggesting: “It is possible, at least partially, to separate money from credit provision, with banks and stablecoins coexisting and non-banks carrying out more of the credit provision role.” He has previously stressed that stablecoins must “pass the test of singleness of money”, ensuring that one pound always equals one pound (something that cannot be guaranteed if a currency is backed by risky assets).
This isn’t just caution for caution’s sake – it’s grounded in both history and recent events.
During the US’s Free Banking Era in the middle of the 19th century, state-chartered banks could issue their own paper money (banknotes) with little oversight. These “wildcat banks” often issued more notes than they could redeem, especially when economic stress hit – meaning people holding those notes found they weren’t worth the paper they were printed on.
A much more recent example is the collapse of TerraUSD (UST) in May 2022. Terra was a so-called stablecoin that was supposed to keep its value pegged 1:1 with the US dollar. In practice, it relied on algorithms and reserves that turned out to be fragile. When confidence cracked, UST lost its peg, dropping from $1 to as low as 10 cents in a matter of days. The crash wiped out over US$40 billion (around £29 billion) in value and shook trust in the whole stablecoin sector.
But Bailey’s crypto caution extends to CBDCs too. In his most recent Mansion House speech, the Bank of England governor said he remains unconvinced of the need for a “Britcoin” CBDC, so long as improvements to bank payment systems (such as making bank transfers faster, cheaper and more user-friendly) prove effective.
Ultimately, the form our money takes in future is not a question of technology so much as trust. In its latest guidance, the IMF underscores the necessity of earning public trust, not assuming it, by involving citizens, watchdog groups and independent experts in CBDC design, rather than allowing central banks or big tech to shape it unilaterally.
If done right, digital money could be more inclusive, more transparent, and more efficient than today’s systems. But that future is not guaranteed. The code is already being written – the question is: by who, and with what values?
10.09pm, October 10 2025: This article was updated post-publication to remove a quote which a reader highlighted as having been used erroneously.
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