House Republican’s CBDC Bans Must Close All Loopholes
After discovering that, for two years, the federal government lied to the American people and imposed countless authoritarian measures based on those lies, you would think that we would be wary of any new calls for centralized power. Sadly, this has not been the case.
In March of 2022, the Biden administration, along with the New York Fed, directed the launch of a Central Bank Digital Currency (CBDC) pilot program. While there are countless inherent privacy and security dangers of a CBDC, the biggest fear is it being used to subject law-abiding Americans to a Chinese-style social credit system. Some of their proposals would even use CBDC’s to promote their left-wing ideals like “equity” and “inclusion” (i.e. communism) as well as the administration’s climate scam.
Thankfully, Republicans have introduced multiple pieces of legislation aiming to ban CBDC’s, but we must ensure that any bill that moves through Congress closes off the loopholes before passage. For example, sound money champion Rep. Alex Mooney (R-WV) will be introducing a great bill that would ban the pilot program loophole. The bill would say that, “the Federal Reserve System and the Federal reserve banks may not establish, carry out, or approve a program intended to test the practicability of issuing a central bank digital currency, including by partnering or coordinating with a private sector entity to carry out such a program.”
It is also imperative that any legislation includes language to not only ban CBDC’s and any pilot programs, but also ban any back-end coordination with private sector entities. This would include banning the “wholesale” use of CBDC’s. Academics have coined this term to describe the use of CBDC’s by financial institutions. Allowing banks to use CBDC’s would incentivize the Federal Reserve to control the back-end of large transactions. This is exactly the approach taken by China who is using the CBDC concept, along with the Blockchain, to strengthen their surveillance and social credit systems.
For these reasons, Sen. Mike Lee’s (R-UT) “No Central Bank Digital Currency Act” has emerged as the gold standard legislation when it comes to fully banning CBDC’s. On top of banning the Federal Reserve from issuing CBDC’s, this bill would prohibit Federal Reserve banks from holding digital currencies issued by the U.S. government as assets or liabilities and from using such currencies to promote the Fed’s disastrous monetary policies. It’s terrifying to imagine the consequences of allowing banks to transfer massive amounts of currency with the click of a button through a CBDC. It would enable the Federal Reserve to more-easily inflict their inflationary policies on the American People which would create lagging effects throughout the economy.
We encourage the House Financial Services Committee to consider legislation to ban CBDC’s, such as H.R. 6415, a bill to prohibit the Federal Reserve from issuing Central Bank Digital Currency directly to individuals. FreedomWorks supports this legislation and encourages the Committee to adopt an amendment to close the loophole that proscribes CBDC’s for so-called “retail” or consumer use.