How is anyone allowed to make their own USD (or any forms of fiat for that matter) of any currency?
Is there a method for doing this?
Couldn't i just create a ERC-20 token and mint myself 1B tokens and use that to buy up the coins in circulation if i wanted to?
How would you get it on exchanges or let people use it as a USD Pair?
Your tokens wouldn't be worth $1 billion, so you wouldn't be able to buy anything. The market value is decided by supply and demand for most cryptocurrencies.
For stablecoins, the effect of supply and demand on crypto volatility is reduced because the crypto asset can be redeemed for 1:1 against the USD at any time.