There’s a push against the federal government’s interest in creating its own ‘digital dollar.’ Senators Ted Cruz, Mike Braun, and Charles Grassley lead the pushback through legislation.
Sen. Cruz recently introduced a bill prohibiting the Federal Reserve from “developing a direct-to-consumer central bank digital currency (CBDC),” per a press release published on March 21. Senators Braun (R-Indiana) and Grassley (R-Iowa) are co-sponsors of the bill.
What The Federal Reserve Has Said About CBDC
For context, the Federal Reserve is the central bank of the United States–meaning the stability and safety of the U.S. dollar and financial system rests on this branch.
Last January, the Federal Reserve released a discussion paper examining the pros and cons of having a CBDC. However, the Federal Reserve says the CBDC is meant to expand safe payment options. If a CBDC happens, it will not “reduce or replace” cash or paper currency. However, the advancement of technology has pushed the government to explore CBDC as an option.
“With technological advances ushering in a wave of new private-sector financial products and services, including digital wallets, mobile payment apps, and new digital assets such as cryptocurrencies and stablecoins, the Federal Reserve and other central banks around the globe are exploring the potential benefits and risks of issuing a CBDC,” the Federal Reserve said on their FAQ’s page.
Some benefits listed include “faster and cheaper payments including cross-border” and expanding consumer “access to the financial system.” For entrepreneurs, the discussion paper says a CBDC could provide a platform to “create new financial products and services.” Every day people and businesses would also have access to a convenient, electronic form of central bank money.
As for cons, there’s the risk of disrupting the financial market structure and the safety and stability of the financial system. The government branch welcomed public opinions for 120 days after releasing the discussion paper. At this time, officials haven’t approved or denied the new system.
Here’s Why Senators And Other Government Officials Are Opposed To CBDC
As mentioned, Cruz, Braun, and Grassley aren’t here for it. Their bill aims to protect financial privacy and keep the dollar dominant.
Senator Ted Cruz’s statement said:
“Not only would this CBDC model centralize Americans’ financial information, leaving it vulnerable to attack, it could be used as direct surveillance tool into the private transactions of Americans.”
When introducing the legislature, Sen. Cruz added:
“This bill goes a long way in making sure big government doesn’t attempt to centralize or control cryptocurrency and instead allows it to thrive in the United States.”
Meanwhile, here’s what his bill co-sponsors had to add. Senator Braun implied centralizing Americans’ financial information means increasing surveillance on their economic activity. He called this “simply a bad idea.” Braun said, “the federal government should not have even more control over your own money.”
Sen. Grassley also spoke about the government potentially tracking “every transaction.” Adding:
“Policy this impactful should be made by Congress, not government bureaucrats, and our bill will ensure that no one is snooping on the finances of hardworking Americans. Every American deserves that peace of mind.”
Minnesota rep Tom Emmer introduced a CBDC Anti-Surveillance State Act to the House in February. As the name suggests, it also aims to protect Americans’ privacy rights by limiting the Federal Reserve’s power over the digital dollar.
In March, Gov. Ron DeSantis also denounced having a CBDC in Florida. He called on state lawmakers to introduce their bill.
“What the central bank digital currency is all about is surveilling Americans and controlling the behavior of Americans,” DeSantis said.
He added that establishing a CBDC is like “opening a can of worms.” In his opposing speech, he spoke about inflation, increasing interest rates, and pressured banks.
