By
Godfrey Benjamin
April 26th, 2024
The bill aims to prevent the Federal Reserve from using CBDC as a tool to implement monetary policy or control the economy.
On February 26, United States Senators Rick Scott and Ted Cruz, along with other members of the Senate, proposed a bill named the “CBDC Anti-Surveillance State Act”, which aims to ban the introduction of central bank digital currencies (CBDC) in the country. The bill comes amidst a growing debate over the role of CBDCs in the financial system and its implications for individual privacy and government surveillance.
US Senators Oppose Biden’s CBDC Plan
According to an official announcement, the senators filed the legislation to halt the Joe Biden administration from moving forward with launching the CBDC as planned.
In 2022, President Joe Biden signed an executive order aimed at supporting the research and development of CBDCs. This directive instructed the US government to evaluate the technological infrastructure and capacity requirements necessary for a potential introduction of the digital assets, with a focus on safeguarding the interests of the American people.
The order also urged the Federal Reserve to continue its research, development, and evaluation endeavors related to CBDCs. However, senators Rick Scott, Ted Cruz, Bill Hagerty, Ted Budd, and Mike Braun opposed the move with the proposed Anti-Surveillance State Act.
Proposed CBDC Anti-Surveillance State Act
The proposed act, currently under consideration, seeks to impose strict limitations on the Federal Reserve regarding the issuance of a CBDC. According to the drafted bill, the Federal Reserve would be prohibited from issuing CBDC directly to individuals, effectively preventing it from acting as a retail bank.
Furthermore, the legislation would bar the Federal Reserve from issuing CBDC indirectly through financial institutions or third parties.
Federal Reserve Has No Authority to Issue CBDC
In addition to these restrictions, the bill aims to prevent the Federal Reserve from using CBDC as a tool to implement monetary policy or control the economy.
The move aims to ensure that the Federal Reserve’s focus remains on its core mandate of maintaining price stability and maximum employment without being sidetracked by the complexities of managing a digital currency.
The proposed bill would require any issuance of a CBDC to be authorized by Congress. This requirement ensures that any decision to introduce a CBDC is subject to rigorous scrutiny and debate.
The Fight Against Privacy Infringement
While Senator Cruz is more concerned about the government’s infringing on the rights of American citizens, Senator Hagerty said he joined the fight to ban CBDCs because of the potential usage of the financial system for political purposes.
He referenced past instances such as Operation ChokePoint and reports of political and religious profiling by the Financial Crime Enforcement Network (FinCEN).
Operation ChokePoint was launched by the United States Department of Justice in 2013 to investigate banks and their relationships with firearm dealers, payday lenders, and other businesses. While operating legally, these businesses were considered to be at a high risk for fraud and money laundering.
“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,” he said.
Hagerty also said that CBDCs could be used as a tool for surveillance and privacy violations by the government. He claimed the bill aims to protect Americans’ privacy and prevent government overreach.
The proposed legislation has received endorsements from several organizations, including Heritage Action for America (HAFA), the Blockchain Association, the American Bankers Association (ABA), the Independent Community Bankers Association (ICBA), and the Club for Growth (CFG).