A group of Republican senators led by Sen. Ted Cruz (R-Texas) has introduced a proposal that would bar central bank digital currencies (CBDC) from being implemented without prior authorization by Congress.
CBDCs are a digital form of a country’s currency, such as the American dollar, that’s backed and controlled by a nation’s central bank. Digital currency advocates say it could improve payment efficiency and expand financial inclusion for populations with limited access to the financial system.
Critics argue that CBDCs have the potential to allow new levels of government interference in people’s finances, provide new avenues for government corruption, and even potentially destabilize the economy, among other concerns.
Sen. Cruz was joined by Sens. Bill Hagerty (R-Tenn.), Rick Scott (R-Fla.), Ted Budd (R-N.C.), and Mike Braun (R-Ind.) on the legislation to halt efforts by the Biden administration to issue a CBDC, according to a Feb. 26 statement from Mr. Cruz’s office.
“The Biden administration salivates at the thought of infringing on our freedom and intruding on the privacy of citizens to surveil their personal spending habits, which is why Congress must clarify that the Federal Reserve has no authority to implement a CBDC,” Mr. Cruz said.
“I’m proud to lead the fight in the Senate to restrict the Federal Reserve’s exploration of and attempt to introduce a CBDC to the American economy.”
The CBDC Anti-Surveillance State Act would prohibit the Federal Reserve from issuing a CBDC directly. The Fed would also be banned from indirectly issuing a CBDC to individuals through financial institutions or other third parties. If successful, the bill would leave the decision for CBDC implementation up to Congress.
Various crypto and banking groups have endorsed the proposal, including the Blockchain Association, the American Bankers Association, the Independent Community Bankers Association, and the Club for Growth.
Federal Government Researching CBDCs Since 2022
The Biden administration has been interested in cryptocurrencies since 2022, when an executive order was issued to study the technology and explore ways to incorporate it into the economy. The Fed and the Treasury Department have been studying the potential uses and structures for CBDCs and started a working group to explore their applications. However, the White House has not explicitly endorsed the creation of a CBDC yet.
CBDCs have received a lot of attention in recent years, sparking a fierce debate about the benefits and possible drawbacks of the technology.
According to the Human Rights Foundation, which unveiled a CBDC tracker in November 2023, out of 193 governments worldwide, 16 have deployed a working CBDC to the public, 39 have started a pilot program, and 64 are still in the research phase.
Among the 55 governments that have deployed or are piloting a CBDC, many are dictatorial regimes, including Belarus, China, and Iran.
Public opinion on CBDCs appears to be mixed. A 2023 Cato Institute National Survey found that only 16 percent of Americans support adopting a CBDC. About 34 percent were firmly opposed, and 49 percent had no opinion on the matter. Overall, the 2,000 Americans surveyed were more concerned about CBDC risks than enthusiastic about the possible benefits.
As the 2024 U.S. presidential election approaches, several candidates have also vowed to ban CBDCs if elected. Former President Donald Trump has promised to “never allow” the Federal Reserve to create a CBDC in the country.
“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,” President Trump said during a Jan. 17 campaign speech in Portsmouth, New Hampshire.
Former presidential candidate and Florida Gov. Ron DeSantis also had promised to ban a CBDC if elected. Speaking at the Family Leadership Summit on July 14, 2023, he pledged to ban CBDCs in the United States if elected president. Mr. DeSantis dropped out of the 2024 presidential race earlier this year.
