Cruz backs a plan that would keep the United States off “an evil road analogous to China’s.”
Senator Ted Cruz of Texas submitted companion legislation to Minnesota Representative Tom Emmer’s bill prohibiting the Federal Reserve from issuing central bank digital currency, or CBDC, directly to citizens on Wednesday. Emmer proposed the measure in the House on January 18. Fellow congressman Cruz’s measure may possibly expedite the bill’s approval or rejection by enabling it to be reviewed concurrently in both houses of Congress.
Emmer, who serves as co-chair of the Congressional Blockchain Caucus, introduced his bill because of fear that a retail CBDC would compel people to create accounts with the Federal Reserve Bank. According to the legislator, this might “be utilised as a surveillance weapon by their own government,” something Americans should never support. In January, Emmer stated:
“By requiring users to register an account with the Fed in order to use a US CBDC, the Fed would go on an evil road reminiscent of China’s digital totalitarianism.” Additionally, he said that centralising customers’ financial data would cause security concerns.
Individuals are not permitted to create accounts with the Fed. It produced an analysis report on CBDC in January that explored the disclosure problems in detail, emphasising the need of striking a balance between individual privacy and the openness essential to discourage criminal activity. The report concluded that the most appropriate structure for a CBDC in the United States would be intermediary, with “the private sector offering accounts or digital wallets to enable the administration of CBDC holdings and payments.”
Intermediation would enable the establishment of a CBDC without altering the Federal Reserve’s authority. Additionally, it would delegate responsibility for identity verification, another critical CBDC characteristic outlined in the report, to a private-sector financial services provider. “The Federal Reserve does not plan to continue with the issue of a CBDC without explicit backing from the executive branch and Congress, preferably in the form of a formal enabling statute,” the Fed report adds.
Cruz’s measure follows a Democratic House proposal on Monday to establish an electronic version of the US dollar that is not based on blockchain technology and is issued by the Treasury Department rather than the Federal Reserve. This electronic money would be based on a device rather than an account.