Texas Senator Ted Cruz on Wednesday introduced follow-up legislation to the US Senate regarding Minnesota Representative Tom Emmer’s bill that would prevent the Federal Reserve from issuing central bank digital currency or central bank digital currency directly to individuals. Emer introduced the bill to the House of Representatives on January 18. Cruz Congressman’s legislation can speed up the passage of a law or its rejection by allowing it to be considered in both houses of Congress at the same time.
Emer, the co-chair of the Congressional Blockchain Group, prompted his bill with concerns that retail CBDCs would force consumers to open accounts with the Federal Reserve. According to the legislature, it can be “used as a tool of surveillance that Americans should never tolerate from their government.” Emer said in January:
“Requiring users to open an account with the Federal Reserve to access the US central bank for the US central bank would set the Fed on a treacherous path similar to digital authoritarianism in China.”
He also said that the centralization of financial information to consumers would create security concerns.
The Fed is not authorized to open accounts for individuals. In January, an opinion piece on CBDCs was published that discussed the disclosure issues that had been raised for a long time and pointed to the need to balance one’s privacy with the openness needed to deter criminal activity. The paper found that the most appropriate form of US central bank digital currency would be a message, i.e. “the private sector will provide digital accounts or wallets to facilitate inventory processing and payments of central bank digital currencies.”
The distribution would allow the creation of a central bank digital currency without changing the powers of the Federal Reserve. It will also leave the responsibility for identity verification, another important characteristic of the CBD included in the document, to the private financial service provider. The Federal Reserve states that “the Federal Reserve does not intend to proceed with issuing a central bank digital currency without explicit backing from the Executive Branch and Congress, ideally in the form of a special authorization act.”
The Cruz bill follows the Democratic Party’s proposal on Monday in the House of Representatives to create an electronic version of the US dollar that does not rely on blockchain technology issued by the Treasury rather than the Federal Reserve. This e-currency will be linked to the device and not to the account.