digital dollar

Senators Unite to Block Digital Dollar and Safeguard Americans’ Privacy

EDITOR'S NOTES

In a bold stand against the Federal Reserve’s push for a digital dollar, senators across the political spectrum are putting their foot down with the ‘CBDC Anti-Surveillance State Act’. Led by Rick Scott and Ted Cruz, this legislation is a critical counterstrike to protect American privacy, aiming to stop the Fed dead in its tracks from turning into a digital Big Brother. By banning the Fed from directly issuing digital currency to the public, it thwarts any attempt to morph into a consumer bank or use digital dollars to pry into Americans’ financial lives or control the economy. This united front signals a deep-seated concern over the digital dollar’s potential to concentrate power, invade privacy, and shake up the banking sector as we know it. Despite the controversy, the Fed remains noncommittal, insisting it would need a green light from Congress to proceed, highlighting the tug-of-war over the future of American currency and privacy.

Pushback against the potential release of a central bank digital currency (CBDC) in the United States continues to mount as several Senators have become the latest lawmakers to file a bill looking to ban the creation of a digital dollar. 

On Tuesday, Senators Rick Scott (R-FL), Ted Cruz (R-TX), Bill Hagerty (R-TN), Ted Budd (R-NC) and Mike Braun (R-IN) filed the CBDC Anti-Surveillance State Act, which seeks to halt efforts by the Biden administration to issue a CBDC. 

The Senators warned that a digital dollar “could give the federal government not only significant transaction-level data down to the individual user, but also the ability to program the CBDC to choke out politically unpopular activity.”

“The CBDC Anti-Surveillance State Act would prohibit the Federal Reserve from issuing a CBDC directly to anyone, ensuring the Federal Reserve can’t mobilize itself into a retail bank,” a press release about the legislation said. “It would also bar the Federal Reserve from issuing a CBDC indirectly to individuals through financial institutions or other third parties, as well as prevent the Federal Reserve from using a CBDC as a tool to implement monetary policy and control the economy. Finally, the bill would require authorizing legislation from Congress for the issuance of any CBDC.”

“Big government has no business spying on Americans to control their personal finances and track their transactions,” said Senator Rick Scott. “It is a massive overreach and a non-starter for me. That is why I am proud to join Senator Ted Cruz to introduce the CBDC Anti-Surveillance State Act to stand up against this invasive practice and keep Big Brother out of your bank account.”

Senator Ted Cruz warned that a digital dollar would infringe on the freedoms of Americans and intrude on their privacy by surveilling personal spending habits, “which is why Congress must clarify that the Federal Reserve has no authority to implement a CBDC.”

Senator Bill Hagerty suggested that a digital dollar would be a federally sanctioned version of Operation Chokepoint, which is the moniker given to government efforts to cut the cryptocurrency industry in the U.S. off from the banking industry. 

“From Operation Chokepoint to recent reports of political and religious profiling by FinCEN, it is clear that government bureaucrats have been far too willing to exploit the financial system to advance political agendas and target Americans,”  Hagerty said. “This bill blocks the issuance of a central bank digital currency, preventing CBDC from being used as a tool to surveil and violate Americans’ privacy.”

Senator Ted Budd also warned that a CBDC “would open the door for the federal government to surveil and control the spending habits of all Americans,” and said, “Any push to establish a CBDC must be confronted and stopped.”

Aside from the privacy concerns introduced by a digital dollar, the creation and dissemination of such a payment vehicle would pose a risk to smaller banks, as the Fed could issue a CBDC directly to citizens and bypass the need to hold the funds in a bank account. 

For this reason, the legislation is also endorsed American Bankers Association (ABA) and the Independent Community Bankers Association (ICBA).

“ICBA and the nation’s community banks strongly oppose the creation of a U.S. central bank digital currency, which would disintermediate community banks, reduce credit availability, and undermine consumer privacy,” said Rebeca Romero Rainey, President and CEO of ICBA. 

“By barring the Federal Reserve from issuing a U.S. CBDC to consumers, the CBDC Anti-Surveillance State Act would avoid the unnecessary risks to consumers and small businesses that a U.S. CBDC would pose,” she said. “We encourage Congress to continue advancing this important legislation.”

ABA President and CEO Rob Nichols said the association “has long believed that a CBDC would pose significant risks to our financial system that would outweigh any potential benefits, including undermining the critical role that banks play in extending credit and powering the economy.”

The list of legislators coming out against a digital dollar gets longer by the week, at both the state and federal levels. 

Filings submitted to the state assemblies in Utah, South Carolina, South Dakota, and Tennessee show a growing movement by state Senators and Representatives to push back against referring to CBDCs as money. The bills in question look to exclude a CBDC from the definition of money, and, if approved, could represent a significant roadblock in the creation of a digital dollar. 

Florida Governor Ron DeSantis kicked off the anti-CBDC wave when he signed a bill in May 2023 that restricts the state’s use of a digital dollar and also banned using CBDCs issued by foreign governments. DeSantis called on other states to use their commercial codes to enact similar legislation, and multiple legislators have since followed suit.

And former U.S. President and current Republican Presidential candidate Donald Trump vowed to “never allow” the Federal Reserve to create a digital dollar if he is re-elected during a recent campaign speech. 

“Tonight, I’m making another promise to protect Americans from government tyranny,” he said. “I will never allow the creation of a central bank digital currency. Such a currency would give a federal government, our federal government, the absolute control over your money [...] they could take your money, and you wouldn’t even know it was gone. This would be a dangerous threat to freedom, and I will stop it from coming to America.” 

While the issuance of a digital dollar is a growing area of contention, the Federal Reserve has stayed relatively quiet on the matter. According to the central bank’s website, “The Federal Reserve has made no decision on issuing a central bank digital currency and would only proceed with the issuance of a CBDC with an authorizing law.”

This article originally appeared on Kitco News

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