S.1124 - Anti-CBDC Surveillance State Act (119th Congress)
Summary
The "Anti-CBDC Surveillance State Act" (S.1124) aims to amend the Federal Reserve Act to prevent Federal Reserve Banks from offering products or services directly to individuals. It also seeks to prohibit the use of a central bank digital currency (CBDC) for monetary policy purposes.
The bill explicitly prohibits the Federal Reserve from testing, studying, developing, creating, or implementing a CBDC. It emphasizes that Congress should grant such authority if it is to exist, referencing Article I, Section 8 of the Constitution.
The bill defines a CBDC as a form of digital money denominated in the national unit of account, a direct liability of the Federal Reserve System, and widely available to the general public.
Expected Effects
If enacted, this bill would prevent the Federal Reserve from issuing a CBDC or offering related services directly or indirectly to individuals. This would preserve the current financial system structure and limit the potential for government surveillance through digital currency.
The bill would also restrict the Federal Reserve's ability to explore and develop digital currency technologies. This could potentially hinder innovation in the financial sector.
The absence of a CBDC could maintain the existing balance of power between the government and individuals regarding financial privacy.
Potential Benefits
- Protects individual financial privacy by preventing the creation of a CBDC that could be monitored by the government.
- Preserves the existing banking system by preventing the Federal Reserve from directly competing with private banks.
- Prevents the potential for the Federal Reserve to directly control individual spending through a CBDC.
- Upholds the principle that Congress should have explicit authority over monetary policy and the creation of new forms of currency.
- Reinforces the importance of decentralized and private digital currency solutions.
Most Benefited Areas:
Potential Disadvantages
- May hinder innovation in the financial sector by preventing the Federal Reserve from exploring and developing CBDC technologies.
- Could limit the ability of the United States to compete with other countries that are developing CBDCs.
- May reduce the efficiency of payment systems by preventing the implementation of a potentially faster and cheaper CBDC.
- Could limit the ability of the government to combat illicit financial activities through a traceable CBDC.
- May disadvantage individuals who lack access to traditional banking services, as a CBDC could provide a more accessible alternative.
Constitutional Alignment
The bill aligns with constitutional principles related to the separation of powers and the role of Congress in monetary policy. Article I, Section 8 of the Constitution grants Congress the power to coin money and regulate its value. The bill asserts that Congress should explicitly authorize the creation of a CBDC, reinforcing this constitutional authority.
Furthermore, the bill's emphasis on protecting individual financial privacy could be seen as aligning with the spirit of the Fourth Amendment, which protects against unreasonable searches and seizures.
However, the Constitution does not explicitly prohibit the Federal Reserve from exploring or developing new forms of currency. The bill's restrictions on the Federal Reserve's activities could be viewed as an interpretation of implied powers.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).