On May 23, 2024, the Republican-controlled U.S. House of Representatives dealt a major blow to the adoption of central bank digital currencies, passing the CBDC Anti-Surveillance State Act (HR5403), which prohibits the Federal Reserve Board from:
- Directly issuing a CBDC without explicit approval from Congress.
- Using CBDC to set monetary policy.
- Maintaining personal financial accounts (something Biden candidate Saule Omarova failed to do) Proposed).
“This is a critical piece of the puzzle for our organization,” said Rep. Patrick McHenry (R-N.C.), chairman of the House Financial Services Committee.
The bill is straightforward. It prevents unelected bureaucrats from issuing central bank digital currencies (CBDCs). CBDCs would undermine Americans’ right to financial privacy. There are already examples of governments using the financial system as a weapon against their own citizens. For example, the Chinese Communist Party is using CBDCs to track the spending habits of its citizens. This data is being used to create a social credit system that rewards and punishes people based on their behavior. This type of financial surveillance would not be tolerated in the United States. The concern is that the current administration does not agree with this. In 2022, the White House issued an executive order to advance research and development of CBDCs. A report corresponding to that executive order did not allay these concerns. That is why we need a national anti-CBDC surveillance law.
The globalist Atlantic Council staunchly opposed the bill in a misleadingly titled editorial: “Prevent the US from becoming the only country to ban CBDC“:
Indeed, if the bill becomes law, the United States will be the only country in the world to ban CBDCs. This would be a self-defeating move in the race for the future of money. The decision will only accelerate the development of alternative payment systems in other countries seeking to bypass the dollar in cross-border transactions, weakening the dollar’s national security role. This would make U.S. sanctions less effective.
The bill’s authors, Josh Lipsky and Ananya Kumar, called the bill a “solution in search of a problem” after Federal Reserve Chairman Jerome Powell said the central bank would not introduce a CBDC without Congress’ approval.
The bill must be approved by the Senate and President Biden. Considering introducing CBDC from 2022Given the partisan nature of the vote, the bill is unlikely to become law, but its passage in the House at least sends a message.
What is CBDC? A quick review
If you’re not familiar with CBDCs, we recommend you take a look at our CBDC Explainer, but here we’ll provide a quick rundown of what CBDCs are and what they can do.
- CBDCs are digital currencies like Bitcoin and Ethereum, but issued by a country’s central bank.
- In a CBDC, the central bank would control the account balances, rather than independent local banks.
- CBDCs would be “programmable” and give governments and central banks greater control over fiscal policy.
For example, a CBDC could allow governments to issue stimulus payments that must be spent within a certain period of time or can only be used for certain items to reduce the chance of inflation.
Conversely, governments could also use CBDC to track and control all economic activity – for example, if a government wanted to effectively ban tobacco products without enacting legislation, they could simply prevent tobacco products from being purchased with CBDC.
This may sound like a conspiracy-fueled science fiction fever dream, but it is very real, and senior officials from Bank of America, the International Monetary Fund and the World Economic Forum have spoken publicly and glowingly about the control that CBDCs would bring. It would not be unfair to liken CBDCs to the “One Ring” of national economies.
