Florida Governor Starts An Anti-CBDC Movement - Excerpts

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On Monday, 20th of March, Governor Ron DeSantis of Florida proposed a new anti-CBDC law. This new legislation aligns with Florida’s Uniform Commercial Code to protect its inhabitants from the implementation of CBDC.

DeSantis’ strong resolution regarding banning CDBC

DeSantis, announced during his speech, that he does not want the sunshine state of the USA to use CBDC as a form of money within its uniform commercial code. According to him, this new measure if implemented will preserve Florida’s reputation as a state that encourages innovation in the financial market while also safeguarding its people from government surveillance of personal finances.

He also added that the scope of this new proposed legislation should not be limited to only prohibiting the use of CBDCs as money. It should also put a stop to any CBDC that is issued by a foreign government or foreign reserve or central bank. DeSantis wants to ensure that worldwide adoption of a digital currency never happens in Florida.

Let us find out what DeSantis aims to achieve with this anti-CBDC move.

What is the motive behind Florida’s ban on CBDC?

DeSantis have reasonable points for moving this new bill which calls on the legislators to pass on an anti-CBDC law. While the benefits of the usage of CBDC are many, it is not without its fair share of disadvantages and potential threats.

DeSantis advocated during his speech that introduction of CBDCs by the US Feds would mean a violation of financial privacy for the people of Florida. If financial control is given to a centralized authority then it may become a mechanism for surveillance and control over people’s finances.

A financial transaction with a digital currency does not offer the anonymity offered by the usage of cash. Digital currency transactions will have every record preserved and thus it will allow the central banks and authorities to keep an eye on every transaction and financial movement. DeSantis stated that this could mean a huge handover of power to the government and loss of financial freedom.

This loud cry on the ban of CBDC by DeSantis also looks like a move to curb the increase of Chinese influence on world affairs and their agenda to use CBDC globally. DeSantis discreetly added during his speech that CBDC could be used to push “their agenda”.

What is CBDC?

CBDC stands for Central Bank Digital Currencies. These are digital and electronic forms of fiat currency issued by the government. Unlike traditional currencies, CBDCs are not pegged to a physical thing. However, there are various types of CBDC. CBDC could be based on a distribution and maintenance model by private sector banks such as e-CYN introduced by China. They could be an account-based model such as DCash which allows consumers to hold deposits directly with the bank.

CBDCs can be distinguished from stablecoins based on the following factors. CBDCs are centralized. They are issued and operated by the state. Whereas, stablecoins are decentralized and do not need any authority. CBDCs are not pegged to any physical commodity, whereas stablecoins are pegged to either a currency, physical commodity or financial tool.

The growing interest and involvement of central banking institutes in CBDCs can be attributed to the fact that the usage of digital currency has increased over the years which has resulted in a sharp fall in cash transactions. This has forced central banks to reassess their role in the monetary system of the country.

The second factor is the growing popularity of cryptocurrency. All around the world consumers are showing increasing interest in digital assets and their usage. This changing shift from fiat to digital currency could pose a threat to fiat currency as a unit of measure. For this reason, central banks aim to step up and increase the role of CBDCs.

The third factor is the rapid demand and increase in global payment. CBDCs would allow central banks greater local authority over global payments and CBDCs can act as a potential source to stabilize local digital payment.

Potential Advantages From The Use Of CBDCs?

The introduction and issuance of CBDCs will reduce a lot of logistical and operational costs for the central banks as compared to the usage of fiat currencies. Investment in new technology for digital finance will prove to be beneficial for the banks in monetary terms.

Increase usage of CBDC will enhance transaction speed and efficiency in global payments which are often challenging and time-consuming for traditional currencies. The adoption of CBDC will allow people from all walks of life to access banking services without needing to open a bank account. A regulated digital payment option will provide greater security and reduce the chances of financial fraud or crime.

Will Other States Follow Suit?

The Governor of Florida concluded his speech by calling out to his peers across other states to join this movement to prohibit CBDCs. He requested other ‘like-minded states’ to start a new law to stop the adoption of CBDC as a form of money. He also proposed to other states that they should not accept any modification to their uniform commercial code which could formally recognise CBDC.

As per his speech, DeSantis had a word with the Governor of Texas over this crucial matter. He is confident that Texas shares the same ideology as Florida when it comes to CBDC and that Texas will join hands with Florida to say no to the introduction of CBDCs.

DeSantis is not the only government official in the US to voice his opinion against the threats posed by CBDC. Similar concerns have been raised by other officials in the country. The Upper Midwestern state Minnesota also took an anti-CBDC stand in February 2023 and introduced new legislation called the ‘CBDC Anti-Surveillance State Act’.

Conclusion

It is too early to predict the challenges which may be posed by the introduction of CBDC at this point. The US Feds is still in the early research phase regarding CBDC and has not decided firmly on whether introducing CBDC will be beneficial for the financial sector of the country. We would also need to wait to see if other states join Florida in this move against CBDC to protect the financial liberty of the people.

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