By intra-government you mean like US vs China? (or any other competitors? We could say Israel and Germany) I think this has always existed though the information age has swung the balance to there being more importance for average citizens to have encrypted data in a more general sense and not just finance.
"Intra" here means inside the same government (you're thinking of "inter"). The hypothesis is that there will be parts of the US government (like perhaps the FBI) that will advocate for government-controlled backdoors into all encryption, while other parts (like perhaps the NSA) will argue for the strongest, backdoor-free encryption possible.
I think it's an interesting hypothesis, but one weakness is that the government can have its cake and eat it too: they can mandate that all encryption have backdoors, except that the government is exempt from that requirement.
Of course, then it just becomes the usual "if you outlaw strong encryption, then only outlaws will have strong encryption". As long as backdoor-free encryption merely exists, the "bad guys" will get their hands on it and use it. So you haven't fixed the problem of being unable to prosecute crimes due to encryption, and at the same time you've weakened everyone's security. This state of affairs is still beneficial to the government, as it makes dragnet surveillance a lot easier, and your average citizen with "nothing to hide" won't seek out the (illegal) strong encryption.
...until the higher ups learn that, yet again, China or Russia or Iran or somebody got their hands on a lot of sensitive data, and they start pressuring the NSA to get a handle on this. I don't know if it's happening yet, but if it hasn't it will.
