Is Mar-a-Lago Accord a subscription model for the USD?

How Bitcoin is the blueprint for Trump’s new financial order.

Recently, a rumour has been circling about a Mar-a-lago Accord – a new plan by Trump’s administration to dramatically alter the global financial system, at the centre of which is weakening the US dollar—hence, the reference to the Plaza Accord.

Whilst no official comment has been made, numerous leaks have merged into the following narrative: Trump believes the global currency status of the US dollar is a major driver of the trade imbalance and contributes to the debt problem; therefore, his administration will seek to weaken the dollar in order to fix those problems. The narrative follows that the US will force other countries to agree to debt swaps and forex interventions to weaken the USD exchange rate and lower financing costs. In essence, Trump is expected to sacrifice the global currency status of the USD to cut debt and trade deficit.

Many commentators were quick to point out multiple issues with such a plan. Trade tariffs threat or withdrawal of security umbrella  may not be enough to get other countries on board; duration swap may cause a sell-off and result in higher financing costs or even uncontrolled market turmoil both in bonds and the currency, higher inflation etc., The plan has been branded as full of contradictions and destructive because the erosion of the dollar’s status as a global currency would consequently weaken the US economic and geopolitical position.

However, considering Trump’s interest in the institutional adoption of digital assets, things may look very different. Perhaps we should view Bitcoin as his inspiration for the new world financial order.

In his executive order on crypto issued on January 23rd, Trump explicitly said he intends to ” promote and protect the sovereignty of the United States dollar, including through actions to promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide”.

Let’s entertain a scenario in which a US dollar stablecoin backed by US treasuries is issued and sold to central banks worldwide. In the simplest form, this could look like a fair market value transaction where current treasury holdings of a central bank X (CBX)are swapped off-market directly with the US treasury, putting those bonds into the collateral of the stablecoin. CBX now holds reserves in the USD stablecoin backed by US bonds, except no interest is earned on those holdings. On the other hand, the US treasury would continue to hold the collateral, which pays coupons so effectively that this would net out the financing costs of those bonds to zero.

Given the many issues involved, such collateral would require resources to manage. It would make sense to swap them into a long-duration zero coupon bond—and this is exactly what the rumour is suggesting—a one-hundred-year zero coupon bond swap. It might sound like a US Treasury buyback, but it opens the door to an unlimited issuance of US debt at zero cost to the Treasury that doesn’t have to be repaid ever ( you can roll it after 100 years anyway).

It is important to be precise about what Trump would achieve here: the US would stop paying the world for using the dollar as a global currency, instead the world would start paying the US for using the USD. Trump is facing challenges from the BRICS and China more specifically and is well aware that defending the USD status as a dominant currency is very costly. Monetary dominance is directly dependent on military dominance. We are used to thinking that it’s fair for the US to foot the bill (i.e. maintain the military and monetary status quo) because it is also the US that chiefly benefits from this system ( financing their deficit, exporting inflation, etc.). However, since the US debt has grown to unsustainable levels, it becomes clear that even the interest alone is a problem. In 2024, the interest payments on the federal debt exceeded the amount spent on defence. It’s easy to imagine Trump saying: „We first pay for the security and provision of the global risk-free asset, and then we pay again ( in the form of bond coupons) to those who use this risk-free asset. Not only do they use it for free, but they receive payments from us – not fair.” The new system would look more like a subscription model- you get to use USD risk-free stablecoin if you are willing to finance the US for free. Interestingly, we are used to paying fees ( namely storage fees) for another safe-haven asset – gold, even though it is not risk-free, so either we agree that USD as a reserve currency has superior value to other reserve currencies and we agree to this new deal, or we all switch our reserves to EUR, JPY or gold. The former seems more likely than the latter.

When you consider the demand for Bitcoin ETFs coming from traditional financial institutions, you can notice how the attribute of low correlation with risk is valuable. The main narrative of this trade is that Bitcoin is digital gold and lowers portfolio risk. Bitcoin pays zero coupons, so why should the US treasury, a risk-free asset, pay coupons to those who use it?

One could ask, why bother with stablecoins? They could just go ahead with the debt swap. Well, yes, but then the foreign banks would be stuck with very long-duration illiquid bonds—hardly a good material for a reserve asset. Secondly, stablecoins would not be a liability on the FED’s balance sheet. Finally, a zero coupon on stablecoin would help weaken the USD.

The rumour does not reveal many details, but it is feasible that the Mar-a-Lago Accord will involve crypto. It could help the USD to maintain its dominant position as a global currency while helping to address trade and fiscal imbalances. Considering the high demand for zero-coupon digital assets, it would be logical for Trump’s advisers to take notice. The recent introduction of Bitcoin as a reserve asset indicates that he wants to explore digital scarcity to manage the demand for the USD. Many options are on the table, and the rumoured Mar-a-Lago Accord may be the beginning of a new blockchain-based monetary system. Nothing short of a seismic change to the global financial markets and global geopolitics.