by Brittany Raymer
Former Digital Writer & Editor
Sen. Ted Cruz introduces legislation to prevent the Biden administration from creating a centralized bank
Sen. Ted Cruz has introduced a bill that would prevent the formation of a government controlled central bank digital currency. The formation of such a bank would leave the country economically vulnerable, open to surveillance and would infringe on Americans’ ability to make certain financial decision.
A recession is imminent, the severity depends a lot on upcoming federal policy. Given how bad the economy is right now, with stagflation slowing down growth, it seems counterintuitive to give the government more control over our lives and finances.
However, there’s seemingly this growing interest in having some sort of centralized digital banking system. It’s something that Sen. Ted Cruz (R-TX) wants to avoid, and he’s recently introduced legislation that would stops such a move in the future.
“The federal government has no authority to unilaterally establish a central bank currency,” Cruz said in a statement. “This bill goes a long way in making sure big government doesn’t attempt to centralize or control cryptocurrency and instead, allows it to thrive in the United States. We should be empowering entrepreneurs, enabling innovation, and increasing individual freedom, not stifling it.”
The legislation is being supported by Sen. Mike Braun (R-IN) and Sen. Chuck Grassley (R-IA), and it would “ban monetary policymakers from implementing the technology.”
As McKinsey & Company explains, central bank digital currency “are the digital form of a government-issued currency that isn’t pegged to a physical commodity. They are issued by central banks, whose role is to support financial services for a nation’s government and its commercial-banking system, set monetary policy, and issue currency.”
The danger with such a system, which relies heavily on mainstreaming cryptocurrency, is that it could be left wide open to currency and economic manipulation and disruption.
In addition, there are concerns that if the Federal Reserve were to implement a centralized system, that the government would be able to track all transactions. Though tracking is part of this digital age, the idea of ever miniscule purchase being tracked by the federal government is disconcerting.
The other problem is that this system that’s entirely digital, without potentially any form of physical currency, would leave the country vulnerable to cyberattacks and make the economy more prone to economic disruptions.
Other countries—including China, Australia, Japan, India, Russia and South Korea—are exploring such a system and it has been implemented in the Bahamas, Nigeria and Jamaica. If those are the only countries that have a current system, it doesn’t sound very promising.