For years now, the Biden administration has toyed with the idea of a central bank digital currency. A group of Republican senators are working to ensure that such a currency will never exist in America.

From The Hill. Republican senators introduced legislation Monday that would ban official cryptocurrencies backed by central banks, a type of proposed digital asset that the Biden administration and Federal Reserve have expressed interest in studying.

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GOP senators said that Fed-backed cryptocurrencies would pose privacy concerns and allow regulatory authorities access to the private spending habits of individual Americans.

Sen. Ted Cruz (R-Texas) described Fed-backed digital currencies, which are also known as Central Bank Digital Currencies (CBDC) or stablecoins, as “programmable money that, if not designed to emulate cash, could give the federal government … significant transaction-level data down to the individual user.” …

“Recognizing the potential benefits and risks of a U.S. central bank digital currency (CBDC), the reports encourage the Federal Reserve to continue its ongoing CBDC research, experimentation, and evaluation,” the White House said in a 2022 statement.

Both the Fed and the Treasury Department have been studying the potential uses of and structures for CBDCs, starting a working group to explore their applications. Even so, the White House has not explicitly endorsed the creation of a CBDC, and Fed Chair Jerome Powell said the central bank will not create one without an act of Congress. …

Monday’s initiative from GOP senators signals that any such research and development on Fed stablecoin technology could be a site of increasingly hostile partisanship.

The GOP proposal would bar the Fed from authorizing Fed stablecoins for individuals to use and credit unions, retail banks, financial cooperatives and other types of third parties to issue to their members or customers.

Those provisions will relieve the banks, which have long sought to stifle proposals to use digital currencies to get around the commercial banking sector, essentially turning banks into a public utility. …

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(Excerpt from The Hill. Photo Credit: David McBee/Pexels via Canva Pro)