Sen. Ted Cruz (R-Texas) introduced a bill Tuesday aimed at preventing the Federal Reserve from following the lead of totalitarian regimes like China in establishing a central bank digital currency. The legislation (S.887), co-sponsored by Sens. Mike Braun (R-Ind.) and Chuck Grassley (R-Iowa), cites as cause the eventuality that a CBDC would be used as a "financial surveillance tool by the federal government."
"The federal government has no authority to unilaterally establish a central bank currency," Cruz said in a statement.
Cruz noted that the bill, which has been referred to the Committee on Banking, Housing, and Urban Affairs, "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. We should be empowering entrepreneurs, enabling innovation, and increasing individual freedom — not stifling it."
Federal Reserve Chair Jerome Powell suggested in June 2022 that an American CBDC could "potentially help maintain the dollar's international standing," noting that the Fed was considering whether it might "improve on an already safe and efficient domestic payments system."
While the Fed may think it worth looking into, Braun noted a U.S. CBDC "is simply a bad idea."
"The federal government should not have even more control over your own money," added Braun.
Nationally syndicated radio host and co-founder of Blaze Media Glenn Beck recently underscored that the problem with a CBDC is that "there is no physical cash. There’s even [a physical aspect] with Bitcoin — you can take it on a thumb drive and you stick it in your pocket, or you can move it from one off-ramp to another. Just memorize your seed phrase, that’s all … but it’s yours."
Conversely, with a CBDC, it's only electronic, "only in the Federal Reserve System," noted Beck.
The CATO Institute published a study last month that identified a number of faults with a CBDC, emphasizing that it would "most likely be the single largest assault to financial privacy since the creation of the Bank Secrecy Act and the establishment of the third-party doctrine."
The study indicated that a CBDC will make the process by which governments freeze someone's financial resources — as Canadian banks did in concert with the Trudeau government in its crackdown efforts on peaceful protesters in 2022 — easier and faster, having established "a direct line between citizens and the government itself."
Policymakers would also be able to set negative interest rates, thereby forcing spending by causing people to lose money.
In addition to a loss of transparency and the ability to force spending, the government would also be put in a position where it could prohibit people from buying certain goods (e.g., alcohol).
Cruz's Tuesday statement advanced another concern raised in the CATO study: A CBDC would leave Americans' financial information vulnerable to attack. The study noted recent IRS data breaches have evidenced the fallout that might occur in the event that hundreds of millions of Americans' sensitive financial information was centralized, then breached.
Grassley raised the matter that a decision this impactful should not be made by government bureaucrats, but rather by elected representatives of the American people.
Even then, Grassley stressed that the "American people ought to be able to spend their money how they choose without the possibility that every transaction could be tracked by the government."
Cruz introduced his bill one day after Gov. Ron DeSantis (R) announced legislation to ban CBDCs in Florida.
"The Biden administration’s efforts to inject a Centralized Bank Digital Currency is about surveillance and control," DeSantis said in a statement. "Today’s announcement will protect Florida consumers and businesses from the reckless adoption of a 'centralized digital dollar' which will stifle innovation and promote government-sanctioned surveillance."
DeSantis' office suggested that a federally controlled CBDC was "the most recent way the Davos elites are attempting to backdoor woke ideology like Environmental, Social, and Governance (ESG) into the United States financial system, threatening individual privacy and economic freedom."
Concerning DeSantis' initiative, Foundation for Government Accountability CEO Tarren Bragdon said, "Our money says In God We Trust. The central bank digital currency changes that to In Government We Trust. That’s wrong and I am grateful for the Governor’s continued pushback of an out-of-control DC bureaucracy."
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