The Texas House and Senate proposed legislation that would authorize the creation of a state-issued digital currency backed by gold. The move is seen as a challenge to the Federal Reserve’s monopoly on money and an alternative to a potential central bank digital currency. Senator Bryan Hughes and Representative Mark Dorazio, both Republicans, introduced Senate Bill 2334 and House Bill 4903 respectively, which would require the state comptroller to establish a fully gold-backed digital currency that is redeemable in cash or gold.
The legislation further mandates that the comptroller establish a mechanism for using this gold-backed digital currency in everyday transactions. The state of Texas would hold the gold as a trustee on behalf of digital currency holders to ensure the currency’s redemption in gold.
Under the proposed legislation, individuals would be able to purchase digital currency from the state, which would use the funds to buy gold held in secure vaults such as the Texas Bullion Depository. Digital currency holders could then redeem their funds for dollars or gold. The legislation also stipulates that digital currency should be easily transferable or assignable to any other person by electronic means.
If passed, this legislation could create an option for people to conduct transactions using sound money, potentially undermining the Federal Reserve’s control over the US monetary system.
Central Bank Digital Currencies (CBDC)
Governments around the world are increasingly exploring the use of digital currencies, with some even piloting central bank digital currencies (CBDCs). However, concerns have been raised about the potential for these currencies to be used as tools for increased government surveillance and control over citizens’ financial activities.
One alternative being proposed is a gold-backed digital currency, which would provide an option for individuals and businesses to transact using sound money and potentially undermine the Federal Reserve’s monopoly on money. In Texas, legislation has been introduced to establish a state-issued digital currency that is fully backed by gold and redeemable in cash or gold.
The move towards CBDCs is often linked to the so-called “war on cash,” which aims to eliminate physical currency and allow for greater government tracking and control of consumer spending. Nigeria is already attempting to get people to accept its CBDC, while China, India, and the US have all launched pilot programs to test their own digital currencies.
Critics argue that the elimination of cash would make it impossible to hide even the smallest transactions from government scrutiny, potentially leading to a loss of privacy and increased government control. Economist Thorsten Polleit has warned that the advent of a digital euro could accelerate the path toward a surveillance state regime.
