What Stablecoins, CBDCs, and De-Dollarization Mean for the Future of Money
For nearly eight decades, the U.S. dollar has sat at the center of the global financial universe. It's the asset everyone trusted, traded, and measured against. But as technology reshapes how value moves and nations seek more control over their own financial destinies, the world’s relationship with the dollar is shifting.
Welcome to the new era of monetary multipolarity where stablecoins, central bank digital currencies (CBDCs), and tokenized assets compete to define the future of money.
Stablecoins: The Digital Glue
Stablecoins are the quiet workhorses of crypto and modern finance. They’re digital tokens designed to keep a stable value, usually pegged 1:1 to a national currency such as the U.S. dollar. Their goal is to make digital money usable for everyday transactions without the wild price swings of Bitcoin, Ethereum, or other alt coins.
- USDC and USDT are primarily backed by cash and short-term U.S. Treasuries, as verified in public reserve attestations from Circle and Tether.
- DAI (MakerDAO now Sky) is minted against over-collateralized crypto and, increasingly, real-world assets (RWA) (including exposure to short-duration U.S. Treasuries through RWA vaults), with on-chain smart contracts managing the peg.
Not all stablecoins are backed by dollars in a bank. Some attempt to maintain their peg entirely through algorithms, expanding or contracting supply automatically to stabilize value.
The best-known example, TerraUSD (UST), was designed to stay at $1 by being redeemable for a variable amount of its sister token, LUNA. When confidence fell in 2022, that mechanism triggered a “death spiral”. As users fled UST, more LUNA was created to maintain the peg, destroying both in the process. The collapse wiped out tens of billions in value and effectively ended the era of “pure” algorithmic stablecoins.
A few projects, like Frax (FRAX), still use a hybrid approach: part collateralized, part algorithmic. Frax’s model adjusts the ratio dynamically depending on market stability, providing partial reserves while still using algorithmic supply control.
Others, such as Ampleforth (AMPL), experiment with elastic supply by rebasing the number of tokens each user holds daily to nudge the market price toward $1, rather than using reserves or collateral.
These designs show how algorithms can act like mini central banks, automatically tightening or loosening monetary supply. But the lesson of the past few years is clear: without credible collateral, transparency, and market trust, even the smartest code can’t always guarantee stability.
In decentralized finance (DeFi), an open, blockchain-based alternative to traditional banking, stablecoins power lending, trading, and yield strategies.
In traditional finance (TradFi), meaning banks, payment networks, and central institutions, stablecoins are beginning to bridge the old and new systems, enabling instant payments, low-fee remittances, and programmable transactions.
Think of them as programmable dollars: still familiar, but now frictionless and interactive.
CBDCs: Governments Go Digital
While stablecoins are private-sector inventions, Central Bank Digital Currencies (CBDCs) are issued by governments. A government issued Digital Dollar would be a digital form of sovereign money and operate like a direct liability of the central bank, just like cash. They are starting to emerge, particularly in places where there is a desire to monitor every transaction.
- China’s e-CNY is already in active pilot and rollout phases, including limited cross-border testing through Hong Kong.
- The European Central Bank entered a preparation phase in November 2023 for a potential Digital Euro, focusing on infrastructure rather than public distribution.
- The Bank of Canada continues to research a potential digital Canadian dollar but has stated there is no current need or plan to issue a retail CBDC, focusing instead on monitoring payment innovations and maintaining readiness if conditions change.
- The U.S. Federal Reserve is conducting technical and policy research on a possible digital dollar and running limited wholesale CBDC experiments through the New York Fed, but no decision or authorization has been made to issue a U.S. retail CBDC.
- The Reserve Bank of Australia is actively piloting a wholesale CBDC for institutional settlement and tokenized assets but has indicated that a retail CBDC offers limited benefits at present and is not a near-term priority.
CBDCs could make payments faster and broaden financial inclusion but they also raise new questions about privacy, data collection, and state control. Unlike physical cash, every digital transaction could, in theory, be monitored.
The philosophical contrast is sharp: Stablecoins decentralize trust while CBDCs centralize it.
The World is Slowly De-Dollarizing
Many nations are gradually diversifying away from the U.S. dollar, not abandoning it but reducing dependence on it for trade, debt, and reserves.
Why?
- The U.S. uses dollar dominance as a sanctions tool, which some nations see as a strategic vulnerability.
- Debt expansion and inflation raise questions about long-term value.
- BRICS and regional blocs are building alternative payment systems for trade in local or digital currencies.
The dollar still dominates global reserves, about 58% in 2024 and roughly 56-58 % in 2025, depending on exchange-rate effects but that share has declined from around 72% in 2000.
This is diversification, not collapse, yet it marks a slow structural shift in global finance.
So what are the implications if it continues?
The steady decline in the dollar’s share of global reserves signals a slow erosion of what economists once called America’s “exorbitant privilege.” For decades, the United States has benefited from the dollar’s status as the world’s default reserve and settlement currency. That dominance has allowed Washington to borrow cheaply, sustain persistent trade deficits, and wield unparalleled geopolitical influence through dollar-based sanctions and control of payment networks like SWIFT. As other countries diversify their reserves, those privileges weaken slightly, reducing both the U.S. government’s financial flexibility and its leverage in global affairs.
A smaller reserve share also hints at rising financing costs for the United States. If fewer foreign central banks hold U.S. Treasuries as reserves, domestic investors must absorb a greater share of federal debt issuance. Over time, that could place upward pressure on interest rates, make deficits more expensive to finance, and inject greater volatility into bond markets. The dollar is far from losing its safe-haven status, but the fiscal breathing room that came with global demand for Treasuries is gradually shrinking.
More broadly, this shift reflects the rise of a multipolar financial order rather than a loss of faith in the dollar itself. Central banks are diversifying prudently into euros, yen, and yuan, while others are accumulating gold and commodity-linked assets as hedges against inflation. At the same time, regional and digital settlement systems are emerging that allow trade to occur without relying exclusively on U.S. dollar rails. This diversification can make the global financial system more balanced and resilient, but it also complicates coordination during crises and weakens the Federal Reserve’s ability to project monetary influence abroad.
For the United States, a smaller global footprint for the dollar means the Federal Reserve’s policy decisions may reverberate less predictably across foreign markets. It also underscores the need for fiscal credibility, innovation, and productivity-driven growth to maintain investor confidence. Yet for other nations, and for innovators building the next generation of financial infrastructure, the trend opens new opportunities. It creates space for regional payment networks, trusted stablecoins, and cross-border systems like NEAR Protocol that can provide verifiable, neutral infrastructure for digital settlement.
The decline from 72 percent to 56 percent does not mark the end of dollar dominance, but it does represent the end of unquestioned supremacy. The world is diversifying - slowly, cautiously, and digitally. In practical terms, that means the U.S. will pay a little more to borrow, other currencies and networks will gain influence, and innovation will increasingly gravitate toward open, programmable systems that enable trade and trust across multiple monetary domains.
The dollar built the old financial order; decentralized, verifiable networks may well build the next one.
Mounting Fiscal and Monetary Pressure
Beyond these structural trends, the U.S. fiscal situation is accelerating. The national debt surpassed $38 trillion in October 2025, increasing at roughly $1 trillion every five to six months which is more than double the pace of the prior quarter-century. This rapid buildup adds pressure to debt-servicing costs, inflation expectations, and global confidence in the dollar’s long-term stability.
Meanwhile, the U.S. dollar has depreciated about 10% against a basket of major currencies during the first half of 2025 which is its sharpest mid-year decline in decades. At the same time, the dollar’s share of official global reserves fell to ~56.3% in Q2 2025, the lowest in modern records.
While much of that drop reflects valuation effects (other currencies strengthening) rather than large-scale selling, the combination of a weaker exchange rate and reduced reserve share has intensified debate about the dollar’s future as the world’s anchor currency.
☠️ What If the U.S. Switched to a Stablecoin?
Imagine Washington announcing:
“We’re done with the U.S. dollar. From now on, America will operate on a stablecoin, perhaps USDC, and we’ll stop paying our debts in old dollars.”
Such a move would be economically and politically seismic. The results would unfold almost instantly.
💣 1. Default and Collapse of Trust
U.S. Treasuries, the backbone of global finance, are denominated in U.S. dollars. If the government refused to honor those debts in its own currency, it would constitute a sovereign default. Investor confidence would implode, global markets would crash, and the credibility of the United States, long anchored by faith in the dollar, would evaporate overnight.
🌍 2. A Global Chain Reaction
As roughly 60 percent of global reserves and much of world trade are dollar-based. Abandoning the dollar would instantly devalue trillions in reserves held by foreign central banks, triggering a global asset dump and cascading financial instability. Hyperinflation, currency chaos, and a flight to alternatives like the euro, yuan, or gold would likely follow. The very architecture of global finance would splinter.
🧠 3. The Stablecoin Paradox
The irony is that stablecoins depend on the dollar for their value. If the dollar were replaced or disavowed, tokens such as USDC, USDT, or DAI would lose their peg because their underlying collateral, U.S. dollars and Treasury assets, would no longer hold stable value.
In short, the U.S. couldn’t “switch” to a stablecoin without destroying the foundation that makes it stable in the first place.
⚡ Alternate Scenario: What If the U.S. Switched to Bitcoin? (same would hold for other crypto)
Imagine the U.S. government declaring:
“The era of fiat is over. From today, Bitcoin is legal tender for all debts, public and private.”
It would be a seismic shift replacing a managed, elastic system with a fixed-supply, decentralized asset.
🧱 1. Monetary Shock Therapy
The dollar currently underpins U.S. fiscal and monetary policy, allowing the government to issue debt, adjust interest rates, and respond to crises through liquidity tools like quantitative easing. By adopting Bitcoin, the U.S. would lose the ability to print or control its money supply. Every dollar of government spending would have to be financed by taxes or Bitcoin reserves. In essence, monetary policy would vanish, replaced by a rigid digital gold standard. Deflationary pressure would likely follow, constraining growth and amplifying recessions.
🌍 2. Debt and Credit Collapse
All existing U.S. debt, about $38 trillion, is denominated in dollars. If the U.S. transitioned to Bitcoin, it would need to either:
- Convert all debt into BTC (an astronomical task given Bitcoin’s limited supply), or
- Default on old dollar debt entirely.
Either option would vaporize global bond markets. Credit systems from mortgages to international loans would seize up, as there would be no central issuer to guarantee stability.
🔥 3. Economic Volatility on a Global Scale
Bitcoin’s price is highly volatile, fluctuating 30–50% within months. That volatility might diminish if it became the global base currency but the transition period would be chaotic. Consumer prices, wages, and savings would swing violently. Exporters and importers couldn’t hedge efficiently, and fiscal planning would become nearly impossible. The world would experience a monetary earthquake, with the U.S. at its epicenter.
🧠 4. Geopolitical and Strategic Fallout
The U.S. dollar is not just money, it’s a tool of power. It enables sanctions, foreign aid, and global influence through institutions like the IMF and World Bank. Ceding control of the monetary base to an open-source, borderless network would strip Washington of its most potent geopolitical lever.
In effect, U.S. monetary sovereignty would migrate from the Federal Reserve to a decentralized protocol maintained by miners around the world - including in rival states.
⚖️ The More Realistic Possible End States?
The future of global money could evolve toward several realistic outcomes:
Digital Dollar Dominance. The U.S. modernizes its currency through regulated stablecoins or a Federal Reserve issued CBDC, retaining leadership on new digital rails.
Multipolar Reserve System. The dollar, euro, yuan, and commodity-backed tokens share global reserve roles in a more balanced system.
Digital-Asset Standard. Decentralized assets such as Bitcoin or tokenized gold emerge as neutral settlement layers, functioning like digital commodities for trade.
Fragmented Blocs. Distinct economic regions (U.S./EU, China-led, BRICS) develop separate CBDCs and payment networks with limited interoperability.
Confidence Crisis. A low-probability but high-impact breakdown in U.S. fiscal credibility that forces a global monetary reset.
The most probable path is a blend of #1 and #2: the dollar remains powerful but must share space within a digitally connected, multipolar world.
🧠 Why It Matters
For innovators, investors, and policymakers alike, these changes open enormous opportunities:
Stablecoins make finance programmable and borderless, usable by anyone with a digital wallet.
CBDCs promise efficiency and official legitimacy, though at the cost of potential oversight.
De-dollarization introduces healthy competition and room for neutral, trust-minimized settlement systems that no single nation controls.
In this emerging architecture, trust becomes programmable, money becomes interoperable, and national advantage depends on how quickly institutions adapt.
🚀 The Vital Point
This transition is not so much a threat as an inflection point.
The rails of global finance are being rebuilt and whoever controls the trust layer will define the next century of economic coordination.
That trust layer will emerge from open, verifiable, and interoperable networks and systems designed for transparency, efficiency, and collaboration.
Protocols like NEAR Protocol are already showing what that future can look like: fast, low-cost, carbon-neutral infrastructure where identity, assets, and intelligence coexist across public and private domains.
NEAR’s emphasis on human-readable accounts, chain abstraction, and AI-integrated smart contracts offers a foundation where stablecoins, CBDCs, and AI-driven agents can operate side-by-side with verifiable trust.
It’s the kind of infrastructure that could quietly power the next monetary era. The one where value moves as freely as information. Just another reason why Vital Point is building on the NEAR future.
