Sen. Ted Cruz (R-Texas) introduced a new bill on Tuesday preventing the Federal Reserve from central bank digital currency.
The legislation (S.887), co-sponsored by Sens. Mike Braun (R-Ind.) and Chuck Grassley (R-Iowa), argues CBDC would eventually be used a government surveillance system.
“The federal government has no authority to unilaterally establish a central bank currency,” Cruz said.
Cruz noted that the bill “goes a long way in making sure big government doesn’t attempt to centralize or control cryptocurrency and allows it to thrive in the United States. We should be empowering entrepreneurs, enabling innovation, and increasing individual freedom — not stifling it.”
In June last year, Federal Reserve Chair Jerome Powell said that American CBDC could “potentially help maintain the dollar’s international standing.”
Powell noted that CBDCs would also “improve on an already safe and efficient domestic payments system.”
While the Federal Reserve touted the positives of such a digital currency, Braun said CBDC “is simply a bad idea.
“The federal government should not have even more control over your own money,” added Braun.
According to a study published by the CATO Institute last month, a number of issues with CBDC were found, stressing 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 warned that CBDC would give the government more power to freeze someone’s financial resources, similar to what the Canadian banks did in its crackdown on peaceful farmer protesters in 2022
Digital currency would also allow policymakers to set negative interest rates, forcing spending and causing people to lose money.
It’s not just the lack of transparency surrounding the use of CBDC; governments could also be given the power to prohibit people from buying certain goods.
Ted Cruz also raised more concerns about the CATO study on digital currency.
CBDC could also leave Americans’ financial information open to cyber attacks. As the study noted, the IRS data breaches showed such a fallout might happen in the event of millions of Americans’ sensitive financial being centralized.
Grassley asserted that such a decision should not be made by the government but rather by elected representatives of the American people.
He also emphasized 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.”
The introduction of Cruz’s bill came a day after Florida Gov. Ron DeSantis announced legislation to ban CBDCs in his state.
“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 warned that government 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.”
Foundation for Government Accountability CEO Tarren Bragdon also warned that CBDC gives the government far too much control.
“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 D.C. bureaucracy,” Bragdon said.
Unlike decentralized digital assets like Bitcoin and Ethereum, CBDCs are operated by a centralized government entity.