For governments, fighting the coronavirus pandemic is like fighting a war. 

The leaders of Italy, Spain and Germany have used the analogy – along with the CEOs of Bank of America and the U.S. telecommunications giant AT&T – to describe the mass-scale efforts needed to combat the disease: mobilizations of the health care industry, a retooling by factories to produce masks and makeshift morgues to accommodate a fast-rising death count.

During a televised press conference this week, U.S. President Donald Trump characterized himself as a “wartime president.” 

Now, it’s becoming clearer that the economic toll of the virus, as in a war, is likely to be dire. In the U.S. alone, a record 3.3 million jobless claims were filed last week. Deutsche Bank predicts the country’s job losses might exceed 15 million, with Europe approaching a similar level. Countries are prepping aid and stimulus packages into the trillions of dollars, stretching already heavily indebted government balance sheets. Central banks led by the U.S. Federal Reserve have pledged nearly unlimited support to financial markets. Investors have flown to safety in U.S. dollars, and in doing so driven down emerging-market currencies, inflicting additional economic damage on some of the world’s poorest countries.

See also: Why the US’ $2 Trillion Stimulus, Unlimited QE Will Expose the Monetary System’s Flaws

So with officials starting to envision what it might take to rebuild damaged economies and restore society to a semblance of normal, speculation is mounting that seismic shifts might be in the offing for the global monetary system — a phenomenon that historically has occurred in the wake of world wars. 

Think Bretton Woods, the historic gathering in 1944 at a mountaintop resort in New Hampshire, which set the template for the current system and entrenched the dollar’s near-century-long reign as the world’s dominant currency. 

“I wouldn’t rule out anything at this point,” says Markus Brunnermeier, a Princeton University economics professor who has advised the International Monetary Fund, Federal Reserve Bank of New York and European Systemic Risk Board. 

Questioning dollar dominance

Even before the coronavirus hit, questions were percolating among some economists and monetary officials over whether the dollar-based system could last through the 2020s. 

One concern is that monetary policy in the U.S. – actions by the Fed to maximize domestic employment and keep prices stable – reverberates through countries all over the globe, often saddling them with higher inflation whenever their currencies weaken versus the dollar; while exporters of raw materials or manufactured goods might become more competitive, consumers feel the pinch from higher prices for imported goods. Another factor is that so many commodities such as oil, copper and gold are priced in dollars, leaving producers including Russia, Brazil and South Africa at the mercy of foreign-exchange markets.   

See also: Don’t Apply 2008 Thinking to Today’s Crisis

Bank of England President Mark Carney floated the idea of a “synthetic hegemonic currency,” possibly based on new digital-asset technologies, to reduce the dollar’s “domineering influence” on global trade. China, the world’s second-largest economy, has been pressing forward with a digital version of its yuan that might be used more widely in global trade. Facebook, the social network, proposed last year to create its own payment token, libra. Bitcoin, launched in the throes of the 2008-09 financial meltdown, offers another alternative. 

“Eventually we’re going to get past this crisis,” said Tim Shaler, a former portfolio manager at the bond fund Pimco who now serves as chief economist for iTrust Capital, which allows clients to buy cryptocurrencies and physical gold through their retirement accounts.  “If there’s a possibility to create some digital currency not tied to any domestic economy, there might be an opportunity for somebody to figure that out.” 

The Fed helicopters in with trillions

It’s little surprise the Federal Reserve is intervening so deeply in U.S. markets during a time of crisis. That “quantitative easing” (QE) playbook was put in place by former Fed Chair Ben Bernanke, who garnered the moniker “Helicopter Ben” thanks to his advocacy for plying the financial system with large quantities of much money when needed. In a matter of months in 2008, from August to December, the Fed’s balance sheet doubled in size to more than $2 trillion. It doubled again during the next few years to over $4 trillion. 

On Monday, the U.S. central bank, now led by Chair Jerome Powell, made an unprecedented pledge to buy bonds in unlimited amounts to support markets, while reviving 2008-era QE emergency-lending programs to ply banks, Wall Street dealers and even corporations with fresh liquidity. The new efforts could quickly balloon the Fed’s balance sheet to north of $8 trillion, says Stephen Cecchetti, who headed the monetary and economic department at the Bank for International Settlements in Basel, Switzerland, in the early 2010s.

If there's a possibility to create some digital currency not tied to any domestic economy, there might be an opportunity for somebody to figure that out.

On Wednesday, lawmakers in Washington were negotiating a $2 trillion aid package, but the investment-research firm Evercore ISI predicted this week in a report that another $3 trillion might be needed. Some of the Treasury bonds issued to finance surging U.S. government budget deficits might get sopped up by the Fed.  

“The central bank has to be a part of the war machine,” said Cecchetti, now a professor of international economics at Brandeis University. 

The dollar’s inflationary threat 

Despite the flood of new dollars, the U.S. currency has surged in recent weeks to its strongest levels in three years. Inflation is muted, and the economy’s weakness means prices in the U.S. won’t be pressured upward anytime soon. 

But the Fed’s trillions could eventually lead to higher inflation. There also might be a renewed outcry that such money injections merely bail out bankers and rich people, with few of the benefits going to the middle or lower classes – similar to the arguments of the Occupy Wall Street movement that followed the 2008 crisis. 

Outside the U.S., central banks might emerge from the coronavirus shock with a stronger appetite for independence from American influence over the global monetary system. 

See also: Geopolitical Crisis May Benefit Oil, Gold and CBDCs, Not Bitcoin

“It’s going to be interesting to see how it plays out when we have at least two major financial players that are going to emerge from this,” said Omer Ozden, CEO of RockTree Capital, a merchant bank with expertise in blockchain technology. “China will have its own thoughts and may take a different direction from, let’s say, a Bretton Woods-style global organization.”

Trustless world, trustless systems

It’s highly unlikely the global monetary system would see a negotiated accord along the lines of the Bretton Woods accord, which was joined by 44 countries, said Edwin Truman, a senior fellow at the Peterson Institute for International Economics who oversaw the Federal Reserve’s division of international finance from the late 1970s through the late 1990s. 

Trump’s brash, freewheeling style and protectionist impulses in recent years have alienated former allies in Europe, and his border wall campaign has ratcheted up tensions with Mexico. He demonized China in last year’s trade war and recently referred to the coronavirus as the “China virus.” 

See also: Bitcoin and Gold: Evaluating Hard-Cap Currencies in Times of Financial Crisis

“One of the big challenges of today, in contrast to 2008-2009, is that the state of national cooperation is pretty low,” Truman said. “In order to do, collectively, a big change in the system, people would have to agree, and everyone seems to be fending for themselves.” 

For George McDonaugh, CEO and co-founder of Isle of Man-based KR1, a publicly traded cryptocurrency investment company, it’s the head-scratcher of “helicopter money” that might ultimately raise fundamental criticisms of the current monetary system. Deep interest rate cuts and central bank money injections in ever-growing quantities appear to have become the default solution whenever a market crisis hits every seven to 11 years.   

The Fed’s trillion-dollar money injections during the 2008 financial crisis did little to weaken the dollar’s dominance in the years since, but this time might be different. 

“If someone on TV says we can have infinite money, someone on the other side of that TV screen says, ‘Why have I been working my ass off for the past 40 years?’” McDonough said.