An alliance of 5 Senators in the United States recently submitted opposition against the digital USD plans of the Federal Reserve. The group of senators co-signed a bill that demands imposing a ban against CBDCs.
On 26th February, Sen. Ted Cruz, Sen. Bill Hagerty, Sen. Rick Scott, Sen.Mike Braun, and Sen.Ted Budd presented the Anti-Surveillance State Act. This bill intends to invoke legislative opposition against the Federal Reserve’s plans to issue a digital CBDC.
Unlawful Surveillance of Citizens
The group of senators claims that the CBDC program of the Biden administration could pave the way for unlawful surveillance of citizens and hinder their financial autonomy. Speaking on behalf of the alliance, Senator Cruz has asked Congress to establish that the Federal Reserve is not authorized to directly offer specified products or services to individuals. At the same time, he advocated for a ban on monetary policy implementation via CBDC networks.
In the same manner, Sen. Scott and Sen. Budd raised a point about protecting the rights to financial privacy for American citizens. The U.S. Supreme Court passed the Right to Financial Privacy Act in 1976 as part of Statuary Fourth Amendment bank data protection.
The alliance of legislators retained that CBDCs can grant the Federal government the ability to monitor and direct the financial decisions of locals. Citing these concerns, senators called for imposing a ban on local CBDC.
Anti-CBDC Bill to Seek Approval for Digital Dollar Launch
If the bill gets a green light it will require government institutions and monetary authorities to get Congressional approval for any CBDC launch. At the same time, the bill will also prevent the Federal Reserve from operating as retail banking services providers.
Five Associations across America have also joined hands to push back against the CBDC issuance. These organizations include names like Heritage Action for America, the Independent Community Bankers Association, the Club for Growth, and the Blockchain Association.
Meanwhile, former president Donald Trump has reasserted an anti-CBDC policy as part of his 2024 election campaign. He credited fellow Republican Party member Vivek Ramaswamy for shedding light on the negative effects of CBDCs.
On the other hand, the Federal Reserve has been conducting research to measure the economic and financial impact of CBDCs on the value of USD as a reserve currency.
On this account, a paper published by Fed analysts indicates that a foreign-issued CBDC is unlikely to make a difference on USD as value storage. However, the report claims that the role of USD as a medium of exchange may be affected.
The Board of Governors at the Fed backed the research paper that listed the perceived pros and cons of central bank digital currency (CBDC) to combat changes in international trade dynamics.
Advantages of Digital Dollar
On the other side of the bridge, there are a host of CBDC detractors who tout the benefits of a digitized version of USD. This group highlights issues such as centralization, government control on individual transactions, US surveillance, and the ability of authorities to block bank accounts.
A team of senior economists added observations in the paper about the impact of CBDCs on USD on an international and domestic scale.
The analysis reveals that around 90% of Central banks in the world are working on local CBDC projects. The researchers promoted that the Federal Reserve is also conducting research on the digital US dollar keeping in line with the ensuing trend.
Furthermore, the paper has also cited reservations about the necessity of USD to compete against foreign CBDCs. As part of this paper, the analysts have talked about the possible decline of USD value as a unit of account and store of value with large and stable foreign CBDCs. The paper noted that foreign CBDCs or denominated stablecoins have the potential to erode USD value as a medium of exchange.
The researchers proposed the issuance of a digitized USD with a technical infrastructure that harbors acceptability among the business sector, banking industry, and retail population of the country. A set of 5 US senators are also working on another bill to implement a ban against CBDCs in the region.
