Monetary sovereignty: how the GENIUS Act is reshaping global power

Since the modern banking system emerged in 1694, the state has always retained control over money. Today, however, the growth of digital technology and private powers could see this sovereign authority change hands.

In economics, monetary sovereignty is defined as a state's ability to issue its own currency, set its value by controlling the amount in circulation through a central bank, and require its use as the sole legal means of paying taxes and settling debts within its territory. Although it is rarely expressed in these terms, this definition also encompasses political power in its broadest sense: whoever controls money also determines the conditions under which a society produces, trades, saves and withstands crises.

It also assumes that the state is the only actor with the technical and institutional capacity to issue a viable monetary instrument on a large scale. That monopoly has been challenged on several occasions: first in 2009, when Satoshi Nakamoto created Bitcoin; then in 2014, when Tether launched the first dollar-pegged stablecoin; and again in 2019, when Facebook unveiled Libra, a cryptocurrency backed by a basket of sovereign currencies and intended to circulate among its three billion users.

Regulators stopped that project before it could get off the ground, but it compelled central banks around the world to look beyond their own concerns and confront a question: what happens when a private platform takes over the sovereign functions of money? Without fully answering it, Washington offered a glimpse of the consequences of such delegation in July 2025. Donald Trump signed the GENIUS Act, a federal law that, for the first time, regulates and legitimises the issuance of stablecoins by private American actors, without establishing a sovereign digital dollar in return. Can we truly still speak of an international monetary system when one of its members - and, moreover, the world's leading power - has just redefined its rules unilaterally without consulting the others?

Are stablecoins parasites of sovereign currencies?

By institutionalising the stablecoin, the GENIUS Act is almost self-contradictory: in order to protect its sovereignty, the American state has agreed to submit to the private sector. As a cryptocurrency whose value is pegged to the dollar, it is designed to offer its user price stability - hence its name - shielding them from the wild swings of other cryptocurrencies. It therefore draws its credibility from the central bank issuing the reference currency, while capturing transaction flows that would otherwise have passed through the traditional banking system.

It thus feeds entirely on the trust citizens place in their state, without returning any share of it. For Murat Ungor, an economist at the University of Otago, the risk of the social contract weakening must not be underestimated. “Money is power. The question is whether that power will lie in the hands of democratic governments accountable to their citizens, major technology companies accountable to their shareholders, or foreign governments pursuing their own strategic interests,” he explains.

For the United States, the calculation is defensible: it is preferable for the dominant stablecoins to be American and regulated under federal law, rather than Chinese, unregulated, or pegged to another basket of currencies designed to bypass the dollar.

For states whose currency is not the dollar - meaning almost all of the world's 195 countries - this mechanism is doubly formidable. Their citizens move towards an instrument denominated in a foreign currency, guaranteed by a foreign public institution and distributed by foreign private companies. Their central bank loses effective money in circulation without having the tools to measure it in real time, or the political legitimacy to prohibit it.

In this sense, the term “parasite” can be used without hesitation to describe the institutionalised stablecoin, because it spreads by capillary action across all economies orbiting the dollar. That is, more or less, the whole global economy. It lives within the host - the dollar system - using its energy, namely its credibility, and spreads to other organisms - other economies - without necessarily contributing to their health.

The world's response to Washington

In response to the creeping privatisation of money formalised by the GENIUS Act, 130 countries accounting for 98% of global GDP have entered the same race: that of the central bank digital currency (CBDC). The aim is to place public authority back at the centre of the digital payments system through a dematerialised equivalent of sovereign banknotes, guaranteed directly by the central bank. “When you look at your bank balance, you see a promise made to you by your bank. With a CBDC, that money would be a direct claim on the central bank itself,” Ungor explains.

China was the first to act: the digital yuan was launched as a pilot in 2020, then progressively extended nationwide until 2023, with the ambition of reducing dependence on American payment networks in international trade.

Europe was slower to respond, as the ECB did not officially begin the digital euro preparation phase until November 2023, with a rollout not envisaged before 2028. The United Kingdom, India and Brazil have also introduced comparable programmes, but the lead built up by American stablecoin issuers could prove impossible to overcome, since they already benefit from the immense network effect of digital platforms.

Is it therefore right to say today that states' monetary power is disappearing? Strictly speaking, no - and that is why the contemporary economic situation is so difficult to grasp: no state has formally surrendered its monetary sovereignty, and their central banks still possess the full arsenal of sovereign powers. Yet it would be naive to regard monetary sovereignty as a binary attribute that a state either has or does not have. It is a continuum, measured chiefly by the share of real transactions over which a central bank still has influence, and that influence is steadily eroding. The erosion varies between economies: it is faster where financial institutions are weak, and slower where central banks are robust and have the means to respond by accelerating the deployment of their own CBDCs.

Presse-citron's analysis

Two concepts should be distinguished here: monetary power and monetary sovereignty. The first is a right, while the second is its exercise; they are inseparable, and that connection is now under severe strain.

While states' right to mint money - as it was once described - has not vanished, its durability has never been so threatened since 1694, the year the Bank of England was founded and when the then-revolutionary idea emerged that a public institution could guarantee a currency better than any private actor ever could. It took until 2025 and the GENIUS Act for that founding principle to be officially called into question.