As the next presidential election nears, Robert F. Kennedy Jr has joined forces with Florida Governor Ron DeSantis in a bid to challenge jurisdictional restrictions on financial freedom, drawing attention to the danger a central bank digital currency (CBDC) could pose. The Fed, however, has recently clarified that it is not launching a global CBDC with its FedNow payment system, a real-time payments service designed to bridge the gap between merchants, consumers, and banks.
Simply put, a CBDC is a digital currency backed by a central bank. This digital form of money is considered to be a form of the store of value, allowing customers to hold and transfer assets quickly, safely, and with lower transaction costs. Not only is a CBDC more convenient and faster than paper currency, but it is also more secure.
Yet, not all are convinced that a CBDC is in the best interests of the American people. Robert F. Kennedy Jr and Ron DeSantis have each taken measures to combat the potential dangers of the technology. Kennedy has raised the alarm about the technology on Twitter, suggesting it could bring about “financial slavery and political tyranny”, while DeSantis’s move has been to challenge the notion of a CBDC in the Sunshine State by introducing a ban on CBDCs—from any country—to the state’s legislature.
Notably, this is not the first time Republican lawmakers have voiced their concerns about the technology. South Dakota Governor Kristi Noem, House Majority Whip Tom Emmer, and NSA consultant and whistleblower Edward Snowden have all denounced the digital currency. Reconciling their concerns, they point to the power a CBDC could wield in the hands of the government, allowing it to surveil private financial affairs, programmatically limit spending, or exclude certain classes of people (such as those wishing to purchase firearms) from using the technology. As Noem warned her constituents in a statement, “UCC is a very powerful tool whose primary purpose should be uniformity in commercial transactions and not picking winners in the marketplace or providing a mechanism for the government to control the financial activities of its citizens.”
Further representing the divided opinion on the CBDC are the 20 other states such as New Hampshire, North Dakota, Texas, and California which have proposed pro-CBDC legislation. Despite federal support for a CBDC, President Joe Biden has instructed officials from the U.S. Treasury Department and National Security to keep progress updates so far on the technology limited.
The issue of the national CBDC has been further complicated by the myths and misperceptions that have resulted in misunderstanding the role of cash and other payments. As Carla Reyes, an Assistant Professor at the Southern Methodist University Dedman School of Law tells Decrypt, “In my view, a lot of the connection between CBDCs and the UCC in the political discourse reflects a misunderstanding of the role of the UCC as private law”. This bill does not ban cryptocurrencies, nor does it grant CBDCs the same status as tangible currency. Rather, it functions to simply clarify whether a medium of exchange should be defined as money or not.
What those striving to challenge the use of CBDCs will have to come to terms with is that the hurdle they face is not a technical one but one of politics. To bring about true financial freedom, they must convince their state’s lawmakers that their concerns on the CBDC front are far-reaching, otherwise what we could see is a Government-regulated, programmable CBDC that could be manipulated to suit the Government’s needs.
With the 2024 elections and the potential launch of FedNow fast approaching, now is the time to pay attention and draw attention to the wide-ranging implications a CBDC could pose on our financial freedom. Kennedy and DeSantis’s potential roles in the battle for financial freedom should not be underestimated, and their efforts could set the stage for a heated debate when it comes to the implementation of a national CBDC.
