GOP Pushes to Ban CBDCs Over Privacy Concerns

Five Senate Republicans have introduced legislation that would block the digital dollar.

The “CBDC Anti-Surveillance State Act,” announced Monday (Feb. 26), would prevent the Federal Reserve from issuing a central bank digital currency (CBDC), either directly or indirectly. Instead, the bill would require Congressional legislation to approve the issuance of a CBDC.

The bill is authored by Sens. Ted Cruz of Texas, Bill Bill Hagerty of Tennessee, Florida’s Rick Scott, Ted Budd of North Carolina and Indiana’s Mike Braun.

Cruz introduced similar legislation last year, arguing that the federal government could use a digital dollar as a way to track its citizens. He repeated that argument in a Monday press release posted to his website.

While there are no concrete plans for a CBDC in the U.S., the issue has still drawn the attention of Republicans, including some former White House hopefuls.

The question of privacy also figures into the CBDC debate in Great Britain. Last month, the country’s treasury issued a report that said any legislation creating a digital pound must be drafted with user privacy in mind.

Meanwhile, Europe is getting closer to developing its own CBDC, which, as PYMNTS wrote last week, could help push the U.S. towards speeding the development of a digital dollar.

A recent posting on the Federal Reserve website said: “If one or more large countries were to introduce an internationally accessible CBDC that were appealing across several dimensions — such as cost, speed and user experience — then the appeal of these currencies might gain on the margin, at least as a transaction medium, at the expense of the dollar if there were not an equivalent dollar option.”

This month saw the parliamentary European Committee on Civil Liberties and Justice lend its support to legislation that would make a digital euro legal tender. Meanwhile, a trio of European Central Bank advisers and directors wrote in a recent blog post that a digital euro must be used as a payment method, and not for investments.

“To preserve the economic function of commercial banks, individual digital euro holdings would be limited,” they said in the post. “Merchants would be able to receive and process digital euros but would not be able to hold them at all — protecting the corporate deposit base of the banking system. Moreover, digital euro holdings would not accrue interest.”

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