US Senator Mike Lee is going to war with the central bank’s digital currency (CBDC). The elected official from the US state of Utah has introduced a bill banning the Federal Reserve or any federal government agency from issuing a central bank digital currency in the US. He believes that the CBDC is an intrusion into the lives of citizens.
Opposition to the U.S. CBDC is growing
While the Biden administration is determined to issue a central bank digital currency, more and more voices are being raised to criticize this approach. After Ron DeSantis, the Governor of Florida it’s the turn of a senator from the US state of Utah to fight against the CBDC. For Mike Lee, the United States does not need a central bank digital currency.
The Senator Mike Lee has not only criticized the CBDC, he has also proposed legislation to prohibit the Federal Reserve or any federal government agency from issuing a CBDC. For this senator, this law will protect Americans from illegal intrusions, as is the case with the Chinese. Indeed, the Chinese CBDC has an expiration date. This forces its users to spend their funds quickly, or risk losing them.
China has cancelled its citizens’ money after a specified period, forcing Chinese citizens to spend their savings under government coercion. My bill protects Americans from similar intrusion by prohibiting the Federal Reserve or any agency of the federal government from minting or issuing a CBDC. Whether through a direct-to-consumer model or an intermediate model.
Senator Mike Lee.
Economists criticize CBDC
Opposition to the U.S. CBDC extends beyond the political sphere. Even economic analysts are sharply critical of the central bank’s digital currency. This is notably the case of Nicholas Antony and Norbert Michel from Center for Monetary and Financial Alternatives. The two researchers have conducted and published a study on the risks of CBDC.
In their study, Nicholas Antony and Norbert Michel recall that the CBDC is more dangerous than the paper version of money it replaces. Indeed, it is difficult today to know who is using a particular $100 bill. With CBDC, authorities will be able to find out. Thus, the government can easily freeze or seize citizens’ funds. It could also limit spending or impose even negative interest rates. Such a threat to financial privacy is disturbing.
Another concern of both economists is the central storage of financial information. When a financial institution is affected, it is only its customers who lose or risk losing their funds. A cyberattack on the CBDC network would impact all Americans.
Undoubtedly, a central bank digital currency could have unfortunate consequences for the United States. The CBDC would centralize Americans’ financial information, leaving them vulnerable to cyberattacks and surveillance by their government. To that end, Senator Mike Lee’s fight to ban the issuance of the CBDC is to be commended.
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