✨ Potential Ban Looms Over the Digital Dollar
posted 24 May 2024
The HR 5403 bill raises serious doubts about the future of an American digital dollar. The potential introduction of such a currency has sparked months of debate over security and the protection of citizens' freedoms.
Over three years, the Federal Reserve developed and tested distributed ledger platforms to understand their potential capabilities and risks.
The bill to ban the creation of a CBDC, introduced by Republican Congressman Tom Emmer, was first presented in February 2024 but initially failed to gain significant support in the House of Representatives. This time, the bill might still have fallen short of the required votes, but several Democrats joined the Republicans in support.
Emmer's bill asserts that a digital dollar would give the government total control over the monetary system, which contradicts the democratic values of the country.
"Central bank digital currency (CBDC) poses a threat to the financial freedom and privacy of Americans," stated Emmer. "This bill ensures that the Fed cannot undermine our dollar system and replace our personal money with government-controlled digital currency."
Republicans who voted for HR 5403 fear that a CBDC could lead to increased government control over finances and destabilize the American economy.
However, proponents of the digital dollar argue that it could improve payment efficiency, reduce transaction costs, and accelerate the integration of digital currencies into the national financial system. For instance, Democratic Representative Maxine Waters expressed, "In fact, if this bill becomes law, we would be the only country in the world to ban a CBDC."
Given the accelerated development of state digital currencies in many countries, this observation seems valid. Particularly in light of the fact that the United States' primary ideological rival, China, has long been testing its digital yuan. Thus, the U.S. may be withdrawing from competition with its main geopolitical opponent in this area.
The bill now requires approval from both houses of Congress before it can become law. However, given the Democratic majority in Congress, its chances of passing seem slim, as Democrats typically do not support proposals put forth by Republicans.We can probably expect further debates surrounding the CBDC. On both sides, may it be proponents or critics, compelling lines of reasoning could arise.
Some context before we dive in
The Federal Reserve announced its plans to launch a CBDC back in 2020. At the time, officials explained that a digital version of the national currency could significantly speed up payments and make transaction histories more transparent for regulators, thanks to blockchain technology. During the height of the COVID-19 pandemic, paper currencies showed their vulnerability as a vector for infection, making a digital alternative seem logical.Over three years, the Federal Reserve developed and tested distributed ledger platforms to understand their potential capabilities and risks.
The bill to ban the creation of a CBDC, introduced by Republican Congressman Tom Emmer, was first presented in February 2024 but initially failed to gain significant support in the House of Representatives. This time, the bill might still have fallen short of the required votes, but several Democrats joined the Republicans in support.
What Does the Anti-CBDC Bill Entail?
The proposed law aims to block any attempts by the Federal Reserve to introduce a digital dollar, whether as a retail currency for everyday transactions by citizens or as a wholesale currency for institutional use.Emmer's bill asserts that a digital dollar would give the government total control over the monetary system, which contradicts the democratic values of the country.
"Central bank digital currency (CBDC) poses a threat to the financial freedom and privacy of Americans," stated Emmer. "This bill ensures that the Fed cannot undermine our dollar system and replace our personal money with government-controlled digital currency."
Republicans who voted for HR 5403 fear that a CBDC could lead to increased government control over finances and destabilize the American economy.
However, proponents of the digital dollar argue that it could improve payment efficiency, reduce transaction costs, and accelerate the integration of digital currencies into the national financial system. For instance, Democratic Representative Maxine Waters expressed, "In fact, if this bill becomes law, we would be the only country in the world to ban a CBDC."
Given the accelerated development of state digital currencies in many countries, this observation seems valid. Particularly in light of the fact that the United States' primary ideological rival, China, has long been testing its digital yuan. Thus, the U.S. may be withdrawing from competition with its main geopolitical opponent in this area.
The bill now requires approval from both houses of Congress before it can become law. However, given the Democratic majority in Congress, its chances of passing seem slim, as Democrats typically do not support proposals put forth by Republicans.We can probably expect further debates surrounding the CBDC. On both sides, may it be proponents or critics, compelling lines of reasoning could arise.
More breaking news
