NORTH CAROLINA — Sen. Ted Budd co-introduced a bill Monday to prohibit the Federal Reserve from issuing a central bank digital currency, arguing the financial tool would give the government excessive power over citizens’ financial transactions and harm consumer privacy.
Budd (R-NC) co-introduced the Central Bank Digital Currency (CBDC) Anti-Surveillance State Act, which was led by Sen. Ted Cruz (R-TX).
A CBDC is a form of digital currency issued by a country’s central bank with fixed values equal to a government’s fiat currency — government-issued currency without backing from a physical commodity. Eleven countries have launched CBDCs and many others including the United States are exploring their implementation with the use of blockchain technology similar to decentralized cryptocurrencies.
Supporters of CBDCs argue they would add convenience, stability, and privacy to the financial system.
Others argue a U.S. CBDC may be necessary in the fast-changing global financial system. At a May 2022 House Financial Services Committee hearing, Federal Reserve Vice Chair Lael Brainard contended it is important to ensure U.S. leadership regarding the governance of global digital currencies. She noted China has piloted a digital Yuan, and raised concerns about the potential consequences of the absence of a U.S. CBDC on the dollar in international payments.
Opponents counter CBDCs would give excessive federal control over citizens’ transaction-level data and potentially allow the government to restrict accounts associated with politically unpopular activity.
Banking and credit union trade groups have also expressed concerns about CBDCs. In a 2022 joint letter to the committee on financial services, seven organizations warned changes to the public-private financial system caused by CBDCs could have “devastating consequences” on the availability and cost of credit to businesses and consumers.
“As Americans face the prospect of an increasingly weaponized government, ensuring financial privacy is pivotal,” Budd said in a statement. “A CBDC would open the door for the federal government to surveil and control the spending habits of all Americans. Any push to establish a CBDC must be confronted and stopped, and that’s why I’m proud to join Senator Cruz’s effort to do just that.”
Tips or comments? Email journalist Peter Castagno at peter@localdailymedia.com.
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