/View.info/ The unexplored territory
America has quite actively protested against the introduction of the digital dollar in the United States. In the article “Florida State Says No to Central Bank Digital Currency”, I talked about the fact that in March the Florida legislature introduced a bill to ban the use of the digital dollar and any other digital currency of central banks (the English abbreviation is CBDC). Florida Gov. Ron DeSantis supported the initiative and called on other state governors to take similar action.
And then it became known that on May 3, the North Carolina House of Representatives passed a law aimed at banning CBDC payments in the state. The act also prevents the Federal Reserve from using North Carolina as a potential testing ground for its CBDC project. The document was submitted to the State Senate. There is little doubt that Governor Roy Cooper will sign the bill before the summer begins.
It seems that the issue of CBDC is becoming one of the key issues in the presidential election campaign that is starting in the United States. Ron DeSantis has announced his candidacy for President of the United States and in that capacity is calling for a ban on CBDC across America, explaining that it is a tool for “surveillance of Americans and control of their behavior.”
Robert F. Kennedy, Jr., another US presidential candidate, said that CBDCs could be “the grease on the slippery slope to financial slavery and political tyranny”.
Both Ron DeSantis and Robert F. Kennedy Jr. are not opposed to private cryptocurrencies, they even support them. It also goes against the line of Washington and the Fed. In March, Florida’s governor approved legislation to introduce financial literacy programs in schools, including about digital assets. And Robert Kennedy Jr. recently criticized the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC) for “the war on cryptocurrencies”which, in his opinion, led to a banking crisis in the United States.
At the federal level, Republican Congressman Tom Emmer and Republican Senator Ted Cruz have introduced their own bills aimed at limiting the Fed’s authority over CBDCs and banning the currency outright, respectively.
Ted Cruz also expressed his sympathy for cryptocurrencies: “ Those people who want to see a CBDC hate Bitcoin and cash. Let’s be clear, they don’t like cash for exactly the same reason I do – they are not and can hardly be subject to central control […]. And so I hope to see a growing resistance to CBDC,” said the senator.
The statement at the beginning of May by the American businessman Robert Kiyosaki resonated. He is known not only as a businessman but also as a writer. His most famous book is Rich Dad Poor Dad. So he criticized the idea of a digital dollar, comparing it to the character from George Orwell’s novel “1984” Big Brother (who watches everyone). At the same time, Robert Kiyosaki called for the purchase of “more gold, silver and bitcoins”.
Doubts about the feasibility of introducing a digital dollar are being expressed even by Fed leaders. So, on April 18, US Federal Reserve Board member Michelle W. Bowman expressed concern about the possible “politicization” of digital currency and the Federal Reserve itself: “A CBDC that allows this type of control could not only allow the government to limit certain types of private spending or restrict access to bank accounts, but could also threaten the independence of the Federal Reserve.”
Opponents of the digital dollar were extremely happy when IMF Director Kristalina Georgieva on May 1 at the Milken Institute Global Conference (Santa Monica, California) also spoke about CBDC. “We are engaging with countries, we are now working with about 50 countries on this very topic,” the IMF representative added. – We’re going to see a very significant transformation coming from CBDC.” She recalled that the IMF is preparing a CBDC guide for publication to help central banks develop and implement CBDCs.
The decision to produce such a guide was taken after “unprecedented” interest from countries around the world. Georgieva stated that the United States did not show much interest in CBDC for a while, but then joined the global movement.
For reference, official “interest” was shown in March 2022 when President Biden signed an executive order calling for US CBDC research and development. However, there are no official plans to launch it yet.
In July, the Federal Reserve is poised to introduce FedNow, a real-time payment service that some say could be a stepping stone to a CBDC. Fed Chairman Jerome Powell has repeatedly stated that any digital currency launch (even a pilot project) will require approval from Congress and the government.
However, let’s return to the speech of the head of the IMF. She began by saying that the CBDC project has not only pros but also cons and should be handled very carefully. Georgieva explained that the IMF believes that retail CBDC has much more room for error than wholesale CBDC.
The second are those intended for use by commercial banks and large businesses. The first are intended – mainly (or even exclusively) – for use by individuals. Here is her catchphrase (literal translation from English): “Retail CBDCs are completely transforming the financial system in a way that we don’t know what the consequences could be.”
By the way, I will say that the digital ruble project, which is currently being developed by the Bank of Russia, foresees the introduction of the digital currency and retail.
Last year, the IMF published a report highlighting the challenges and opportunities for CBDCs, calling them “uncharted territory.” The report highlights the importance of information sharing between countries implementing CBDC projects.
Currently, about 110 countries are studying the issue or preparing to implement CBDC, while the IMF, as noted by Kristalina Georgieva, is in discussions on this topic with about 50 countries. Among these fifty countries, the main partner of the Fund is the USA, and the “revelation” of the head of the IMF, which was given at the Milken Institute, was agreed with Washington. That is, the positions of the opponents of the digital dollar in America are quite serious.
Translation: ES
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