Ted Cruz Introduces Companion Bill To Emmer's: Concerns retail CBDC issuance by FED

Ted Cruz introduced a similar bill introduced by Tom Emmer back in January, related to CBDCs‘ direct issuance to individuals.

It could be utilised as a surveillance tool that the Americans should never tolerate from their government, highlighted Emmer back then.

There was a concern raised that a retail CBDC might force the consumers to open accounts with the Federal Reserve Bank.

Ted Cruz, Texas Senator, recently introduced a companion bill in the United States Senate on Wednesday for Tom Emmer’s bill that forbade the Federal Reserve from issuing the Central Bank Digital Currency (CBDC) directly to folks.

What Does This Bill Consist?

Minnesota Representative Tom Emmer introduced the bill earlier in January, and the bill introduced by his fellow Congressman Cruz might speed up the rejection or acceptance of the bill by facilitating it to be considered simultaneously in both chambers.

Emmer, who also happens to be the Co-chair of the Congressional Blockchain Caucus, introduced the bill with respect to a concern that a retail CBDC might force consumers to open accounts with the Federal Reserve Bank.

He highlighted back then that it could be utilised as a surveillance tool that the Americans should never tolerate from their own government. And that the requirements of users to open up accounts with the Fed to access a US CBDC would put forward the Fed to an insidious path similar to that of China’s digital authoritarianism.

Further adding that centralising the financial information of the consumers would create security problems. Currently, the Federal Reserve Bank is not authorised to open accounts for individuals.

In January, the Fed released an analytical report on CBDCs in which it discussed the potential problems posed by the Digital Dollar. It highlighted the need to maintain an individual’s privacy with transparency to avoid illicit activities.

The report revealed that the most appropriate form of a CBDC would be intermediated, which means the private sector would provide accounts or digital wallets to smoothen the management of CBDC transactions and holdings.

This intermediation would play it safe on both sides, as it will not change Fed’s authority, additionally handling responsibilities like identity verification, etc., to the private sector. The Fed paper further noted that it does not intend to go forward with the idea without clear support from the executive branch and Congress.

Ted Cruz’s bill introduction was after Monday’s Democratic proposal in the House of Representatives to develop an electronic version of the CBDC not based on the blockchain technology issued by the Treasury Department instead of the Fed.

CBDC is still an emerging concept, but it is ironic to see that some countries like Ghana, etc., have already somewhat established the idea. In contrast, a global economy is still at the thinking stages. It is to look forward to how the country would move forward with it.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing