TL;DR Breakdown
- Gabbard opposes US CBDC development, fearing mass surveillance.
- She urges resistance to digital cashless society, while Fed Chairman argues privacy protection.
- Gabbard links FedNow service to CBDC; central bank refutes claim.
Former presidential candidate and political commentator Tulsi Gabbard has voiced her opposition to the Biden administration’s efforts to develop a Central Bank Digital Currency in the United States. Gabbard contends that CBDCs could be used for mass financial surveillance, infringing upon citizens’ autonomy and freedom.
The Cashless Society Debate
Gabbard, in a weekend tweet, claimed that the federal government’s digital currency project is progressing, with the eventual goal of creating a cashless society where every transaction is monitored and controlled. To safeguard freedom, she urged citizens to stand together against the move towards a digital cashless society.
CBDCs are digital currencies issued by a central bank directly to retail customers, bypassing commercial banks. Proponents, including Federal Reserve Vice Chair Lael Brainard, maintain that central bank digital currencies could offer a more secure and efficient means of payment and remittance.
A May 2022 BIS report revealed that 90% of central banks were exploring CBDC issuance, with over half already developing the technology. The United States joined these efforts after President Biden emphasized the importance of US CBDC research in his crypto executive order last year.
Both House and Senate Republicans, along with Gabbard, a former Democratic party member, have expressed concerns about CBDCs eliminating cash and compromising consumer privacy. Gabbard argued in a recent interview that digital currencies represent “government-sanctioned surveillance and control.”
Federal Reserve Chairman Jerome Powell, however, has stated that a potential central bank-issued digital currency would protect transaction privacy while verifying user identities.
CBDC vs FedNow
Gabbard suggested that the Federal Reserve’s new FedNow service, a real-time payment service for depository institutions, is a precursor to a CBDC. The central bank refuted this claim, clarifying in a statement that FedNow is not related to digital currency, nor intended to replace cash, and is more akin to existing services like Fedwire and FedACH.
European Central Bank President Christine Lagarde has acknowledged the need for innovation in the payments sector, such as digital currencies, to prevent central banks from becoming obsolete. However, she has dismissed traditional cryptocurrencies like Bitcoin as “highly speculative assets” with no future.
Gabbard has previously invested in cryptocurrencies, purchasing Ether and Litecoin during the December 2017 bull market.
