Yes, it’s all trust based. I.e. if some random bank in Iowa decides to just create $10,000,000 out of thin air, the Fed will eventually find out and then they would lose banking license, lots of penalties.

Same goes for countries. If a countries fed just creates new money out of no where and acts as if it’s always existed they risk everything. I.e. losing access to the global banking network, insane currency fluctuations, use your imagination.

The premise is the same though. Our entire financial system as it stands today is based off of trust with auditing oversight and harsh penalties for breaking that trust.