By
Godfrey Benjamin
April 26th, 2024
The US has been exploring CBDCs, but it has not yet determined whether it will pursue one. The possibility of a digital US dollar itself has provoked serious concerns in the country, with the community’s opinions on this matter divided.
US Congressman Warren Davidson has recently called for imposing a ban and criminalizing any initiatives related to designing, creating, developing, testing, or launching a central bank digital currency (CBDC). According to Davidson, CBDCs pose a serious risk as they can be used as tools for coercion and control. Mentioning ethical and privacy concerns related to CBDCs, Davidson compared them to a “Death Star”.
In his tweet from July 23, Davidson also shared a screenshot of a job posting on Indeed by the Federal Reserve Bank of San Francisco. The ban is currently looking for a senior crypto architect to develop a CBDC.
The Federal Reserve is building the financial equivalent of the Death Star.
Central Bank Digital Currency (CBDC) corrupts money into a tool for coercion & control.
Congress must swiftly ban then criminalize any effort to design, build, develop, test or establish a #CBDC. pic.twitter.com/9JWiyj5H2f
— Warren Davidson 🇺🇸 (@WarrenDavidson) July 23, 2023
Congressman Warren Davidson has been quite open in all his statements regarding the industry. Earlier, Davidson accused the US Securities and Exchange Commission (SEC) of failing to do enough for proper regulation of cryptos. Further, together with House Majority Whip Tom Emmer, he introduced the SEC Stabilization Act – a bill that seeks to restructure the SEC and remove its current Chairman, Gary Gensler. Being crypto-friendly, Davidson explained that the bill ultimately aimed to protect the US capital markets. However, he also submitted that this aim could only be achieved by handling the ongoing abuse of power in the agency.
Recently, Warren Davidson also announced the creation of the Congressional Sound Money Caucus. According to Davidson, the caucus will promote sound fiscal and monetary policy in the US while preserving the purchasing power of the US Federal Reserve Note.
Will the US Issue CBDCs?
The US has been exploring CBDCs, but it has not yet determined whether it will pursue one. The possibility of a digital US dollar itself has provoked serious concerns in the country, with the community’s opinions on this matter divided. Among those against CBDCs are Warren Davidson, Florida Governor Ron DeSantis who promised “nix any central bank digital currency” if he became president, and Republican Tom Emmer who referred to CBDCs as spying tools to “choke out politically unpopular activity”.
Meanwhile, Under Secretary of Treasury Nellie Liang said that the US would adopt a CBDC only in case there was enough support from the public. The Federal Reserve has also highlighted that it would only issue a CBDC with the advocacy of the executive branch and Congress, and more broadly the public.
Notably, a number of potential presidential candidates have taken a strong stance against CBDCs. For sure, CBDCs will be one of the key talking points in the upcoming presidential election.
CBDCs Adoption Worldwide
While the US is not yet sure about issuing a CBDC, there are a number of countries that have already made markable progress in adopting central bank digital currencies.
A total of 130 countries representing 98% of the global economy are now exploring digital versions of their currencies, with almost half of them being in advanced development, pilot or launch stages. As many as 11 countries have already launched a CBDC.
In China, 260 million people are now participating in digital yuan pilot testing that covers 200 use cases, from e-commerce to government stimulus payments.
Nigeria has been the first African country to introduce CBDC. In 2022, Nigeria’s Central Bank (CBN) moved to the final stage of testing the CBDC currency, the eNaira.
Another country, Uruguay, conducted a large-scale CBDC pilot program back in November 2017. Following successful pilot testing of e-Peso, the country offered e-Peso payments without access to a smartphone, without a mobile app, using USSD (Unstructured Supplementary Service Data) to register and manage their wallets.
In March, India began testing an offline functionality for its CBDC. India’s largest retail chain, Reliance Retail, will soon start accepting payments in digital rupee in stores during its pilot stage.
Apparently, CBDCs are rapidly gaining popularity globally, overshadowing cryptocurrencies, bank deposits and traditional forms of payments. With its numerous benefits, CBDCs will transform the financial system by facilitating both local and cross-border payments. However, it is also worth bearing in mind the risks they might pose.