(The Epoch Times)—An anti-central bank digital currency (CBDC) sentiment filled the halls of Congress this week as House Republican lawmakers filed new legislation and held a hearing grappling with the issue of digitizing the U.S. dollar.
House Majority Whip Tom Emmer (R-Minn.) reintroduced the Central Bank Digital Currency Anti-Surveillance State Act on Sept. 12, a bill that restricts the Federal Reserve (Fed) and member banks from issuing a digital dollar and using it to construct monetary policy.
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Rep. Emmer and the 49 cosponsors fear that the federal government and “unelected bureaucrats” could exploit a CBDC to monitor Americans’ transactions and stifle political activity, effectively eliminating privacy, individual sovereignty, and free-enterprise competition.
“If not designed to be open, permissionless, and private—emulating cash—a government-issued CBDC is nothing more than a CCP-style surveillance tool that would be used to undermine the American way of life,” Mr. Emmer said in a statement, referring to China’s ruling Chinese Communist Party.
He originally introduced the bill in February, warning that the Biden administration would “create a digital authoritarian-style, surveillance-style digital dollar through an executive order.”
The upper chamber has also seen anti-CBDC legislation introduced by Sen. Mike Lee (R-Utah) and Sen. Ted Cruz (R-Texas). However, because Democrats control the Senate and the White House, political observers believe it is unlikely that these bills will pass. At the same time, proponents contend that these legislative pursuits will create more awareness about the drawbacks surrounding a CBDC.
The CBDC issue has also made its way to the 2024 election trail, as several candidates have expressed concern over the creation of a digital dollar.
Vivek Ramaswamy, an entrepreneur and GOP White House hopeful, described himself as a “big opponent” of CBDCs and purported that they are “a grave threat to liberty in this country.”
Florida Gov. Ron DeSantis told the Family Leadership Summit in Iowa in July that he would prohibit CBDCs if he were elected in 2024.
“Done, dead, not happening in this country,” Mr. DeSantis said. “If I am the president, on day one, we will nix central bank digital currency.”
Mr. DeSantis, who is trailing behind former President Donald Trump by wide margins in the Republican primary polls, has previously called CBDCs “government-sanctioned surveillance.” In March, he signed a bill that would ban the use of a national CBDC as money within Florida.
“The Biden administration’s efforts to inject a Centralized Bank Digital Currency is about surveillance and control,” he 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. Florida will not side with economic central planners; we will not adopt policies that threaten personal economic freedom and security.”
In a June interview with the New York Post, Democratic presidential candidate Robert F. Kennedy Jr. argued that CBDCs are “instruments of control and oppression, and are certain to be abused.”
Speaking at a fintech conference hosted by the Philadelphia Fed Bank on Sept. 8, Fed Vice Chair for Supervision Michael Barr noted that the central bank “has made no decision on issuing a CBDC.”
“Investigation and research are very different from decision-making about next steps in terms of payments system development, and we are a long way from that,” Mr. Barr said in a speech. “The Federal Reserve has made no decision on issuing a CBDC and would only proceed with the issuance of a CBDC with clear support from the executive branch and authorizing legislation from Congress.”
Digital Dollar Dilemma
Five witnesses appeared before the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion on Sept. 14. The hearing consisted of a chorus of anti-CBDC voices, with Chairman French Hill (R-Ark.) asserting that CBDCs do not have much support “except from those on the fringes who think somehow a CBDC might be an amazing solution to many unstated global problems.”
A CBDC could extend the government with more tools to infringe on individual liberty, said Christina Parajon Skinner, an assistant professor at the Wharton School of the University of Pennsylvania.
“Introducing CBDC is likely to have certain costs to individual economic liberty by providing the state with more tools—and hence greater temptation—to establish command-and-control style public policy,” Ms. Skinner told lawmakers, adding that it could diminish private innovation, impact financial market structures, and fail to advance specific goals, like preserving the global dollar hegemony.
“Technology and economic geopolitics can change rapidly, to be sure, but at least right now, the costs of introducing CBDC appear to outweigh the benefits,” she said.
Norbert Michel, the vice president and director at the Cato Institute’s Center for Monetary and Financial Alternatives, cited a litany of risks, including threats to core freedoms.
If a CBDC were installed during the coronavirus pandemic, the government could have programmed a CBDC only to allow transactions with businesses deemed essential or alert authorities if citizens violated COVID lockdowns, Mr. Michel noted.
“The possibilities for the programmability of a CBDC are nearly endless,” he stated. “And in all of them, even the best of intentions are just a few steps away from leading to serious abuses of power.”
This concern might emanate from a recent discussion at the World Economic Forum during a so-called Summer Davos event in China. Cornell University professor Eswar Prasad discussed the possibility of using CBDCs to socially engineer society.
“You could have … a potentially better—or some people might say a darker world—where the government decides that units of central bank money can be used to purchase some things, but not other things that it deems less desirable like, say, ammunition, or drugs, or pornography, or something of the sort,” Mr. Prasad told the audience in June. “And that is very powerful in terms of the use of a CBDC, and I think also extremely dangerous to central banks.”
According to the Atlantic Council, 11 countries have launched a digital currency, including the Bahamas, Jamaica, Nigeria, and Anguilla. Twenty-one nations have launched pilot projects, and 33 are still in the development phase. Dozens of others are researching the subject.
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Results from the Cato Institute 2023 CBDC National Survey found that only 16 percent of Americans support the federal government issuing a central bank digital currency, as many are skeptical. Despite the lack of support, even inside countries that have adopted and employed some incarnation of a digital currency, a 2022 Bank of International Settlements (BIS) study found that 60 percent of central banks have bolstered their CBDC work.