The U.S. House of Representatives has passed a bill to block the issuance of a Central Bank Digital Currency (CBDC) by the Federal Reserve, as such currency could potentially be used for surveillance purposes similar to practices seen in China.
HR 5403, also known as the “CBDC Anti-Surveillance State Act,” was introduced by Congressman Tom Emmer, a Republican from Minnesota, in September of last year.
The bill prohibits the Federal Reserve from “offering products or services directly to individuals, maintaining an account on behalf of individuals, or directly or indirectly issuing a central bank digital currency (i.e. digital dollars) to individuals.” It also prohibits the Board of Governors of the Federal Reserve System from using CBDC to conduct monetary policy or issue CBDC.
On Thursday, with a vote of 216 to 192, the House passed the HR 5403 bill.
In a press release on that day, Congressman Emmer pointed out that unlike decentralized cryptocurrencies like Bitcoin, CBDC is a digital version of sovereign currency designed, issued, and controlled by the government.
Due to the centralized control of CBDC and the ability for the entity in control to program it, it lacks the privacy protections provided by physical cash. Therefore, if CBDC were to be implemented in the U.S., the federal government would have the authority to monitor transactions of American citizens.
Additionally, the federal government could suppress political activities deemed problematic by the ruling party through financial restrictions and manipulation.
In 2022, the Biden administration issued executive orders supporting the research and development of CBDC.
According to a summary released by the White House at the time, “This effort aims to prioritize U.S. participation in multinational experiments to ensure U.S. leadership globally, promoting the development of CBDC that aligns with U.S. priorities and democratic values.”
The Republican congressman mentioned reports from the Federal Reserve and other institutions outlining the interest of the Biden administration in “surveillance-oriented CBDC.”
Emmer noted the willingness of foreign governments to weaponize financial systems against their own citizens, citing China as an example where the Communist Party is using CBDC to monitor citizens’ consumption habits.
In Canada, the Trudeau government froze the bank accounts of hundreds of citizens who participated in the 2022 trucker protest against COVID-19 vaccine mandates.
The bill aims to prevent such events from occurring in the U.S. by blocking the issuance of CBDC by the Federal Reserve, ensuring it never becomes a retail bank that collects personal financial information of citizens.
If the federal government attempts to create a digital dollar, it can only do so with “explicit authority” from Congress.
Emmer stressed that whatever is eventually developed must adhere to the core principles of cash, meaning any government-issued digital currency must be open, permissionless, and private in nature.
He stated, “It can’t be like how the Chinese are using the digital yuan to establish social credit scores based on citizens’ consumption and behavior.”
Congressman Mike Flood, a Republican from Nebraska, emphasized the necessity of preventing the introduction of CBDC in the U.S. in a social media post on May 23.
He wrote, “Imagine your least favorite politician having the power to monitor, restrict, or even shut off financial transactions of political enemies. It’s a frightening thought and precisely why we need to reject the core reason for establishing retail CBDC in America.”
Marshall Hayner, CEO of Metallicus, a company building a digital asset bank network using blockchain technology, suggested that if the U.S. does not establish CBDC, “banks and credit unions should create their private ledgers based on shared consensus while tokenizing the dollar.”
Global CBDC Network
Currently, institutions worldwide are discussing the establishment of CBDC on a global scale. Last year, the International Monetary Fund (IMF) stated it is developing a platform to enable interoperability of CBDC issued by various governments globally.
At an event in Morocco on June 19, IMF Managing Director Kristalina Georgieva said that CBDC “should not be a patchwork of national assertions… to achieve more efficient and more fair transactions, we need to connect the systems of various countries; we need interoperability.”
Writer and serial entrepreneur Aaron Day warned during an interview on Epoch TV’s “American Thought Leaders” program that global adoption of CBDC will push the world towards a “global tyranny, a form of world government based on fear, centralization, and complete dictatorial control.”
Some are concerned that CBDC could pose a threat to traditional banking systems. A report by a Canadian bank in February 2024 warned of such consequences.
The report indicated that CBDC would directly compete with bank deposits in the market. Therefore, CBDC could diminish the market for bank deposits, negatively impacting banks’ profitability and disrupting the financial stability of nations.
Steve Ambler, Honorary Economics Professor at Université du Québec à Montréal, told the Epoch Times that if CBDC becomes a viable alternative to private bank deposits, any pressure on the financial market could trigger a rapid movement of deposits to CBDC.
He said, “It might potentially encourage bank runs to some extent that might not have occurred otherwise.”
Earlier this year, former U.S. President Donald Trump pledged during a campaign event in New Hampshire, “There will be no central bank digital currency created. It will give the federal government absolute control over your funds.”