Independent Australia
14 May 2025

Donald Trump's chaotic monetary policies have opened an opportunity for Australia to reclaim financial sovereignty in a new era of digital currency.Paul Buddereports.

WITHDONALD TRUMPin the White House, global markets are under pressure from erratic policy, economic nationalism and the weaponisation of finance. But beyond the headlines lies a quieter, more profound shift one that sits at the intersection of technology, economic sovereignty and global power.

This is where Central Bank Digital Currencies (CBDCs) come in and why they matter now more than ever. I havewritten about thisback in 2022.

CBDCs are not just a monetary tool, they are a technological infrastructure built on digital ledger technologies such as blockchain or secure databases that allow central banks to issue programmable, traceable and interoperable digital versions of national currencies. In other words, CBDCs represent a digitally native upgrade to money itself, bypassing outdated international systems likeSWIFTand reducing reliance on commercial bank networks.

Digital financial markets in danger of dilemmas

With digital currencies not reaching their potential, it's up to policymakers to implement a better strategy for a stronger digital financial market.

From an ICT perspective, this is a transformative moment. CBDCs enable direct peer-to-peer value exchange between individuals, companies and governments, without requiring intermediaries like commercial banks or third-party processors. They bring the potential for smart contracts, real-time international settlement, and increased transparency and efficiency in everything from welfare disbursements to cross-border trade.

In the face of Trumps unpredictable financial policies and the growing global backlash against dollar dominance, CBDCs offer an opportunity for countries like Australia to reclaim financial and technological sovereignty but only if we act with urgency.

From Keynes to Trump: A broken system reasserts itself

Ivepreviously writtenabout the failure of the post-WWIIBretton Woodsarchitecture to create a truly balanced global financial system. At its core, that failure was the rejection ofJohn Maynard Keynesproposal for anInternational Clearing Union. Keynes rightly saw that global trade imbalances were destabilising, and he argued that both debtor and creditor nations should share responsibility. His idea of a bancor a supranational currency to settle international accounts was visionary, fair and, unsurprisingly, vetoed by the U.S.

Why? Because America, then the worlds largest creditor, had no interest in being constrained.

Fast forward to 2025, and the U.S. is now the worlds largest debtor a complete reversal. This debt burden has long bothered Trump, who sees the trade deficit and foreign-held debt as symptoms of a rigged global system. In principle, hes not wrong Keynes would have agreed.

But unlike Keynes, Trumps response is isolationist, erratic and transactional, not cooperative or visionary. And the risk is that his approach could blow up the very system that still props up Americas economic clout.

World economies embrace benefits of digital currency

With more countries exploring digital currencies, traditional cash could soon become a thing of the past.

Why the U.S. is afraid of CBDCs

Ironically, CBDCs could provide the tools to rebalance the system in a more stable and transparent way, allowing for:

• direct cross-border payments without going through the U.S. dollar;
• programmable settlement conditions, including Keynes-style balancing mechanisms; and
• reduced dependency on private banks and intermediaries.

Yet the U.S. remains deeply reluctant. Why?

Because a CBDC threatens the dominance of the dollar, the power of Wall Street and the entrenched position of commercial banks. More importantly, it threatens the unique geopolitical privilege the U.S. has enjoyed since WWII the ability to run massive deficits without consequences, because the world must hold dollars to trade and invest.

A critical part of that privilege lies in what followed Bretton Woods: thepetrodollar system, established in the early 1970s between the U.S. and Saudi Arabia. Under this informal agreement, oil would be priced and traded exclusively in U.S. dollars. In return, the U.S. provided military and political support.

This arrangement locked in global demand for the dollar and ensured that oil-importing nations needed to accumulate U.S. reserves, recycling surpluses back into U.S. treasuries. In many ways, the petrodollar system became the second pillar of U.S. monetary hegemony, replacing the gold standard with oil-backed dollar supremacy.

Today, even this system is showing cracks. Countries like China, Russia, Iran and Venezuela have all signalled interest in trading oil in non-dollar currencies, including digital yuan and, in Venezuelas case, the short-lived cryptocurrency,Petro. TheBRICSbloc is also openly discussing alternatives. Trumps erratic diplomacy and transactional foreign policy especially withOPECand Gulf States only adds momentum to these shifts.

If CBDCs become the new infrastructure for international trade, the petrodollars dominance could erode far faster than expected and with it, the entire scaffolding of U.S. debt-financed power.

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China and the BRICS are not waiting

While the West dithers, the rest of the world moves forward. Chinase-CNYis already live in dozens of cities and has been tested in cross-border settlements with the UAE and Thailand. The BRICS bloc is actively exploring a CBDC-based clearing mechanism, one that could settle trade outside of the dollar altogether.

These developments arent just technical upgrades. They are strategic moves to create financial sovereignty and resilience in a world where U.S. policy is increasingly seen as erratic and punitive.

Trumps re-election will only accelerate this process. Allies and adversaries alike are quietly building escape hatches from a dollar-dominated system. The digital infrastructure for a multipolar financial world is already under construction.

Australia: Still stuck in neutral

And where is Australia in all this? Ireported on thisa couple of years ago.

Despite a well-run pilot by theRBAandDigital Finance CRCin 2023, we remain in a holding pattern. The official line is that the use cases for a retail CBDC are still emerging and that the private banking system works well enough. But that complacency misses the point: CBDCs are not just about payment convenience, they are about strategic independence.

Relying on global systems increasingly controlled by an unpredictable U.S. Administration is a vulnerability. Do we want to find ourselves in the position of European companies forced to abandon Iran deals because of U.S. secondary sanctions? Or of Asian countries watching their trade corridors disrupted because of the latest Trump tweet?

CBDCs offer a way to build resilience, reduce exposure to U.S. volatility and help shape the next global monetary system, rather than being shaped by it.

We need action, not pilots

Lets be clear: the West has fallen behind. While the U.S. fears its own decline and clings to outdated tools of financial control, others are building the future. If Australia doesnt move soon, we risk being relegated to users of someone elses system again.

A well-designed Australian CBDC interoperable with others, privacy-protecting and complementary to commercial banks could position us as a trusted partner in a new era of digital finance. But that will require political will, regulatory clarity and a clear break from our current complacency.

The window is closing. With Trump back in power, the risks are real and so are the opportunities. We would do well to heed Keyness warning from 80 years ago: systems that serve only the few will eventually collapse under their own imbalance.

Paul Buddeis an IA columnist and managing director of independent telecommunications research and consultancyPaul Budde Consulting. You can follow Paul@PaulBudde.