Trump Stops CBDCs
The Crypto President has arrived. Amidst ballyhooed executive orders and pardons President Trump the biggest move is being overlooked. While pardons of Silk Road founder Ross Ulbricht and January 6ers made headlines the CBDC issue is more salient.
Trump has (for now) ended work on a US Central Bank Digital Currency (CBDCs). The move comes among a flurry of crypto-related actions from the White House and other executive agencies, notably the SEC.
Trump signs executive order stopping CBDCs
The Strengthening American Leadership in Digital Financial Technology executive order includes:
Sec. 5. Prohibition of Central Bank Digital Currencies.
(a) Except to the extent required by law, agencies are hereby prohibited from undertaking any action to establish, issue, or promote CBDCs within the jurisdiction of the United States or abroad.
(b) Except to the extent required by law, any ongoing plans or initiatives at any agency related to the creation of a CBDC within the jurisdiction of the United States shall be immediately terminated, and no further actions may be taken to develop or implement such plans or initiatives.
A CBDC would harm Americans
The order states CBDCs “threaten the stability of the financial system, individual privacy, and the sovereignty of the United States.” Yes.
The threat CBDCs pose to the American public have long been recognized by certain policymakers like Rep. Tom Emmer (R-MN) and wonks like Natalie Smolenski of the Bitcoin Policy Institute, European academic Patrick Schueffel, and yours truly.
Privacy is a big one. As researcher Natalie Smolenski wrote for the Bitcoin Policy Institute, when government functionaries speak of “privacy” in the CBDC context they don’t mean from the state. “Rather, the state is presumed to be an essentially good and trustworthy overseer of markets at every scale, including at the level of individual transactions—and a desire for privacy from the state is implicitly equated to criminal intent.”
But that’s not all. CBDCs place American’s financial sovereignty at the mercy of (at times) partisan bureaucrats at an historically precarious time. Post-COVID, government balance sheets are bleak. Global debt-to-GDP ratio had risen 356 percent by the end of 2021. CBDCs offer a way out.
With real-time access to the total money supply, officials could implement any number of policies deemed in the public interest or necessary for the next crisis. This could include negative interest rates, instant tax collection for every transaction, restrictions on the purchase of disfavored products like firearms, cigarettes, or sugary foods or carbon-based limits on travel.
The bureaucrat’s mind races.
Trump stops CBDCs but global bureaucrats love them
It is interesting to see who actually supports CBDCs. So far proponents include supra-national and global bureaucrats at the European Central Bank and the International Monetary Fund. ECB executive board member Piero Cipollone stated the EU “needs” a digital euro to counter Trump. IMF managing director Kristalina Georgieva states of CBDCs, “We’ve left port and are now on the high seas. This calls for courage and determination.”
The “we” Ms. Georgieva refers to is people like herself. And the “courage” required is to force CBDCs on populations that clearly don’t want them. Even in China, where CBDC implementation has gone the farthest and citizens get the smallest say on such matters the verdict is clear.
After a strong push by the People’s Bank of China for the digital yuan (e-CNY) Chinese adoption, according to one official has been “low, highly inactive.” Part of the reason is China already has mature payment systems like WeChat and AliPay. It’s also likely the result of Chinese seeing e-CNY for what it is—a further step toward a totalitarian social credit system. They won’t use it unless the government forces them. So far the CCP hasn’t forced them, but that won’t likely last.
Trump to his credit has chosen the opposite route, giving Americans monetary freedom by banning a CBDC.
By Jossey PLLC