The United States could design and release a central bank digital currency (CBDC), but it would only proceed with authorizing law. President Joe Biden signed an executive order not that long ago to empower the Federal Reserve to look into the technology. Digital fiat money is much like cryptocurrency in the sense that it operates on a secure, transparent network that uses blockchain technology to create an immutable record of all transactions. The only difference between Bitcoin and CBDC is that the latter is backed and regulated by the government and acts as a legal tender.
Ron DeSantis, who serves as the governor of Florida, vowed to prohibit the use of CBDCs if elected president and even signed a bill to outlaw them in the Sunshine State, arguing a series of drawbacks associated with the digital currency regulated by the government. As we all know, DeSantis has been a forthright disapprover of CBDCs as they allow authorities to monitor Americans’ transactions, providing direct access to their financial data. As far as cryptocurrency is concerned, the Florida Governor has been supporting it as early as 2021, doing his best to put an end to Biden’s so-called war on cryptocurrency.
In March This Year, DeSantis Proposed Legislation to Thwart CBDC
To safeguard the personal finances of Florida citizens from government overreach and corporate monitoring, Ron DeSantis signed Senate Bill 7054, which excluded CBDC from the definition of money. Attention must be paid to the fact that it has no impact on state or local revenues and expenditures (and a doubtful impact on the private sector. Under the Florida Uniform Commercial Code, CBDC can’t be treated as legal tender. DeSantis first announced the legislation in March, urging the governments of other states to join forces in a similar action. Politicians throughout the United States are worried, expressing concerns in a straightforward way and pressing for opposition to the digital dollar.
House Committee Passes Bill to Ban the Fed from Creating A CBDC
The House Financial Services Committee recently advanced a bill hindering the creation of a CBDC to ensure digital currency is explicitly authorized by Congress, giving the House of Representatives the chance to consider the legislation. The bill was designed to expel CBDC pilot programs before they’re put forward and make it impossible for the Federal Reserve to issue digital fiat money that could be used for spying on citizens. At present, there’s no support for CBDC in Congress, except from those at its periphery who believe it might be a good solution to several global problems.
As opposed to decentralized cryptocurrencies, CBDCs are issued by central banks and have the full support of the government backing them. In America and many other countries, not all individuals have access to financial services, using costly alternatives instead. The aim of the digital dollar is to ensure privacy, transferability, convenience, accessibility, and, most importantly, financial security. The introduction of CBDC raises welfare, but it also increases privacy concerns due to the availability of personal information. In a country that routinely abuses the collection and use of data for the purposes of control, CBDCs are an unwelcome intrusion.
CBDC’s Future Depend on How the Government Addresses Concerns About Privacy
As of March 2023, there were several countries and territories with CBDCs, including but not limited to the Bahamas, Nigeria, Montserrat, Saint Lucia, Grenadines, and St. Kitts and Nevis. CBDC could dramatically change the structure of the US financial system, but its future is reliant upon how the government manages to address citizens’ concerns about privacy. America, the global hub for technological innovation, hesitates to advance CBDC even if it would be a good move for its economic identity and global influence. CBDC could disrupt the current system, but in a society that highly values personal privacy, it will only go ahead with clear support.
Generally speaking, people are very concerned about government surveillance of their data, finding recent developments deeply troubling and requiring limits to be introduced. Citizens’ views about privacy matters as regards policymaking, meaning that key decisions about CBDC hinge on the question of whether Americans think it’s reasonable. According to a survey undertaken by the Cato Institute, only 16% of American citizens support the adoption of CBDC, so it’s safe to assume that people are more concerned about the risks than enthusiastic about its benefits. The fear is that the CBDC would create a direct connection between individuals and the government’s central bank.
What is certain is that CBDC is a global phenomenon, with countless states examining the idea and a few already implementing some versions. Many CBDCs rely on the architecture of cryptocurrency, namely blockchain verification, the process of confirming the authenticity and validity of transactions and data within the network. Legislators in both Houses of Congress have introduced bills to ensure the digital dollar doesn’t see the light of day, to say nothing of presidential candidates campaigning against it. Whether or not CBDC will find its place in the currency landscape depends on how the government maintains its commitment to respecting and protecting democratic principles.
Concluding Thoughts
In the event of a digital dollar, efficiency is guaranteed. Records are fully electronic and consolidated, so movements between accounts are instantaneous; individuals and businesses would most likely have accounts at the Fed, so the central bank can freely transfer the funds, eliminating prospective delays. Several Republican officials, including Ron DeSantis, have criticized the idea of CBDC, being far more supportive of cryptocurrency. It will be some years before a digital dollar is designed, approved, and used. At any rate, a strong case must be made that Americans need CBDC.
As the world is becoming more digital, people are investing in cryptocurrency, which is designed to be used in the same way as cash; it’s just that it’s not supported by the central bank. Ron DeSantis has positioned himself as the most crypto-friendly option as far as the race for the Gop presidential election is concerned. In the meantime, congressional leaders continue to exchange verbal blows while federal agencies are struggling to regulate the cryptocurrency industry.