Texas Introduce Legislation to Go Against CBDC Innovation

The government of Texas has reasons to believe that a Central Bank Digital Currency (CBDC) is a bad idea and is pushing against it

The government of Texas has reasons to believe that a Central Bank Digital Currency (CBDC) is a bad idea and has therefore introduced legislation against the idea of a national digital currency. According to the bill which was introduced by the 88th Legislature, CBDC is a “digital form of money that is a liability of the Federal Reserve, rather than a liability of commercial banks.” 

The bill went further to explain why the government-controlled digital currency is a bad idea.

“Retail CBDCs are issued to the general public, establishing a direct relationship between the Federal Reserve and consumers,” the bill stated. “This could lead to unprecedented levels of government surveillance and control over private cash holdings and transactions.”

CBDC Becomes Controversial Topic Amongst Countries

Noteworthy, the implementation of a CBDC has been a hot topic amongst officials of several nations.

While a few countries are already working towards developing their unique CBDC, some others are still considering the potential use cases and benefits of implementing one. Then again, there is another group that has outrightly decided against introducing a CBDC, and Texas just got enlisted.

North Carolina, Denmark Decide Against CBDC

At the beginning of this month, the North Carolina House of Representatives voted in favor of placing a ban on CBDCs. The vote also meant that the nation would not take part in the Federal Reserve branch test of a possible CBDC.

Two months ago, Signe Krogstrup, one of the three governors of the Danish central bank, generally known as Danmarks Nationalbank explained why Denmark declared a lack of interest in issuing a CBDC. First, she highlighted that digital currencies are speculative assets which hold high risks and have no underlying income flow or productive value.

Nations Choose Retail CBDCs over Wholesale CBDCs

However, if a CBDC must be implemented, it would be a wholesale CBDC instead of a retail CBDC.

This is because “Its introduction would change the structure of the financial system and the respective roles and demarcation lines between commercial banks, central banks, and other institutions in the provision of money,” she explained.

So far, retail CBDC has been the choice of many countries who are already carrying out their researches. India announced plans to commence testing its retail CBDC last year, so did the Bank of Thailand.