Senator Cruz of the United States Senate has presented legislation prohibiting the Reserve Bank from directly issuing a CBDC to people and contending with the market. If this CBDC model is implemented, it will centralize financial information, making it susceptible to cyberattacks. Also, the senator believes it will be used to monitor the citizens’ financial transactions.
Senator Cruz Unveils a Proposal to ensure the Reserve Bank does not issue CBDC
According to a statement on the senator’s official web page, the Texan Senator presented the legislation “to restrict the Reserve Bank from directly issuing a digital currency,” according to a statement on the senator’s official web page. Other senators who support the bill include Chuck Grassley and Mike Braun.
“No Fed Reserve may sell goods or services to a person, operate an account for an individual or issue a CBDC,” according to the bill.
The announcement notes that “the bill seeks to preserve the dollar’s supremacy without contending with the public market”, and the Fed must not be allowed to issue consumer bank accounts.”
The Act forbids the Fed from building a direct consumer CBDC that may be utilized by the government for financial surveillance purposes, identical to what is now occurring in China. The senator states that digital currency must conform to three fundamental principles: financial privacy protection, dollar dominance preservation, and innovation cultivation. CBDCs which do not comply with this requirement “may allow an organization such as the central bank to transform into a commercial bank, acquire personal information about customers, and follow their activities permanently.”
In contrast to decentralized cryptos such as BTC, it’s a government institution that issues CBDCs and needs an intermediary,” the senator noted.
The Fed Reserve Ought To Support Crypto Innovation
While presenting the proposal, Senator Cruz noted that the government could either support and nurture crypto innovation or destroy it. This bill will ensure that the authorities don’t centralize crypto and prevent the industry from expanding in the country.
“We ought to support businesses, foster innovation, and expand individual liberty — not suffocating it,” Cruz said.
After Senator Cruz presented the proposal, Congressman Tom Emmer made a statement noting the bill is similar to the one with him, which likewise prohibits the Central Bank from directly distributing a CBDC to people. Emmer presented his proposal on the 18th of January.
“I’m pleased that Congressman Cruz has proposed a companion proposal restricting the Fed’s authority. The apex bank need only create an open CBDC available to the public and can be used on a blockchain. It must also be private as anything less puts Americans at risk, ” noted Emmer.
The Reserve Bank has not decided on the issuance of a digital currency. The Federal Reserve issued a paper in January examining several features of an electronic currency. Certain members of Congress and governors of the Federal Reserve remain divided on whether the United States should release a CBDC. In November, Michelle Bowman, a governor of the Federal Reserve, stated that she does not see the importance of having a CDBC.