Trump Pledges to Block Federal Digital Dollar Plan as Political Tensions Rise

In a recent address in New Hampshire, GOP candidate Donald Trump reiterated his stance against the potential introduction of a central bank digital currency (CBDC) in the United States. 

Speaking ahead of the state’s upcoming primary election, Trump emphasized his intent to protect Americans from what he described as “government tyranny.” According to familiar sources, he pledged to oppose any effort by the Federal Reserve to issue a digital version of the U.S. dollar.

Trump has also pledged to prohibit the Federal Reserve from issuing a crypto coin.

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Fed Exploration of Digital Dollar

The Federal Reserve has yet to make a definitive decision on the issuance of a CBDC. However, the central bank has actively been exploring the technological feasibility of such a move.

Chair Jerome Powell has made it clear that any decision to implement a digital dollar would require approval from both Congress and the executive branch. Despite the discussions surrounding the concept, no formal design has been finalized.

A 2021 paper by the Federal Reserve proposed a model in which the digital currency would be stored in digital wallets maintained by banks or regulated financial institutions. In this model, direct deposits at the central bank would not be an option for ordinary Americans.

Banks would remain responsible for safeguarding transaction information, with the necessary reporting of suspicious payments in compliance with anti-money laundering regulations.

Politically Charged Debate

The issue of CBDC has sparked intense debate among political figures. Florida Governor Ron DeSantis, who is challenging Trump in the Republican primary, has taken a strong stance against the idea.

He has even preemptively prohibited the use of any CBDC in his state, raising concerns about potential government surveillance and comparing it to China’s use of its digital currency. His opposition highlights the growing political tension surrounding this issue.

While the debate intensifies, the Federal Reserve has emphasized the need to balance privacy protections with transparency to combat illicit activities. The ongoing discussions suggest that if a digital dollar is developed, it could initially be limited to interbank payments, potentially reducing transaction costs across borders.

Market Shifts and Political Implications

In a broader political context, recent market trends have shown a decline in confidence regarding Trump’s campaign. By August 17, his odds of winning the forthcoming presidential elections had dropped to 44%, down from a previous high of 72%, according to market predictions.

As of today, Kamala Harris still holds a slight edge over Donald Trump in predicted odds, leading with a 51% chance of success, while Trump follows closely with 47%.