A theory about how the Trump administration could restructure the international financial system to better serve American interests is starting to be taken seriously on Wall Street.
Once considered an outlandish idea, the so-called Mar-a-Lago Accord has recently drawn the attention of strategists and researchers across major banks and research shops. In reports shared with MarketWatch, they have tried to work through the feasibility of such a deal, and how it might impact markets and their clients.
President Donald Trump hasn’t given any hint that he is pursuing or plans to pursue such a framework, which supporters have described as nothing less than a reordering of the international monetary system.
But at least two of the president’s top economic advisers — Treasury Secretary Scott Bessent and Stephen Miran, Trump’s nominee to be chairman of the Council of Economic Advisers — have hinted that it could help the administration achieve some of its ambitions, particularly regarding a reduction of the U.S. debt burden and revival of American manufacturing.
Bessent has reportedly said he would push for “some kind of global economic reordering,” according to the Wall Street Journal.
“Take it seriously, not literally,” said Jim Bianco, founder of Bianco Research, in a post on X discussing the accord.
Essentially, the deal would seek to recruit — or strong-arm by dangling access to American markets, or the American security umbrella — America’s biggest trading partners and creditors into an arrangement that would see them work in concert to weaken the U.S. dollar, lower American borrowing costs and encourage more manufacturing-related investment in the U.S. — all while preserving the greenback’s primacy on the international stage.
The main focus of the deal is the dollar DXY. Although the greenback has softened since the start of the year, it is still trading around its strongest level since the mid-1980s on a trade-weighted basis, according to Steve Englander, the global head of G-10 currency research at Standard Chartered.
But the exact mechanics behind how the accord would work are murky, and questions remain about whether Trump could actually succeed in getting both American allies, like the Europeans, and rivals, like China, to go along with it.
As Miran explained in a paper published in November, the U.S. dollar’s reserve status comes with pros and cons.
One of the drawbacks is that it causes the greenback to be perpetually overvalued by boosting demand for reserve assets like U.S. debt.
There are benefits, too. But as U.S. economic dominance wanes, the costs associated with this status grow increasingly steep, Miran said. This is what the Mar-a-Lago Accord would look to solve.
To put it into action, Trump would need to secure commitments from American trade partners and creditors that they would work in concert to weaken the dollar. But he would also need to ensure that the selling of dollar-denominated reserves wouldn’t push up borrowing costs.
There is also another complicating factor: Tariffs have already been enacted by the Trump administration, which has touted them as a source of revenue and a tool for helping to boost U.S. manufacturing.
But raising tariffs also tends to cause a currency to strengthen. Rather than encouraging more companies to manufacture goods in the U.S., this could have the opposite effect.
To accomplish the delicate balancing act of engineering a weaker dollar without driving up U.S. borrowing costs, Miran, in his paper, turned to an idea first proposed by Zoltan Pozsar, the former Credit Suisse markets guru, who published a paper about the Mar-a-Lago Accord back in June.
As part of the deal, U.S. creditors would agree to swap U.S. bonds held by their central banks for 100-year nontradeable “century bonds.” Otherwise, Washington could threaten to push them out from under the U.S. security umbrella.
These bonds wouldn’t carry a coupon, but they could be redeemed at a slight premium once they mature. To compensate creditors for the lack of liquidity, Fed swap lines would be made available to help them meet any short-term liquidity needs.
“Such a Mar-a-Lago Accord gives form to a 21st-century version of a multilateral currency agreement. President Trump will want foreigners to help pay for the security zone provided by the United States,” Miran said in his paper.
“A reduction in the value of the dollar helps create manufacturing jobs in America and reallocates aggregate demand from the rest of the world to the U.S.,” he added. “The term-out of reserve debt helps prevent financial-market volatility and the economic damage that would ensue. Multiple goals are accomplished with one agreement.”
Miran also proposed charging “user fees” to foreign central banks that hold U.S. debt, essentially retaining a portion of the coupon payments typically paid out by the Treasury and easing the financial costs of borrowing.
Another idea that could be part of the Mar-a-Lago deal framework: Using U.S. assets, like American gold reserves and federally owned land, to potentially collateralize U.S. debt. That could also help lower U.S. borrowing costs, according to Bianco, who brought up this possibility during a recent podcast appearance.
He noted that Trump’s executive order to explore creating a U.S. sovereign-wealth fund could be a step toward making this happen.
Even if Trump could secure the cooperation of foreign governments to help weaken the dollar, establishing the Mar-a-Lago Accord could come with unintended consequences.
By strong-arming U.S. partners into a deal that primarily benefits Washington and the American economy, it could motivate them to speed up their search for a substitute for the dollar. That could threaten the greenback’s reserve status, which Trump has said he would like to preserve.
It could also inadvertently push up U.S. bond yields and, by extension, borrowing costs, as foreign buyers demand more compensation to offset the possibility that lending to the U.S. could come with new strings attached, Standard Chartered’s Englander said.
And there is always the risk that a weaker dollar could push up the price of U.S. imports, potentially stoking inflation.
Some of the deal’s aims appear to work at cross-purposes. One example would be engineering a weaker dollar while encouraging more foreign direct investment into the U.S. Another would be encouraging foreign partners to sell off dollar-denominated assets to weaken the currency, without driving up borrowing costs.
Despite this, Englander said the plan as envisioned by Miran could work.
“Can it work? Sure, it can work,” he said. “Will it work? That will depend on whether Trump has the political capital.”
