Donald Trump, a former US President and Republican Party Presidential hopeful, has reiterated his anti-CBDC stance, vowing never to allow it if voted in for a second time as President of the United States.
The 45th US President, while speaking at a campaign rally in the State of New Hampshire on January 15, promised to block any attempts to create a US Central Bank Digital Currency (CBDC).
Also, Trump credited Vivek Ramaswamy, a former Republican Party candidate, with the idea. Ramaswamy had (earlier) dropped out of the Republican Party primary race after a disappointing showing in Iowa primaries.
The policy thrusts by Mr. Donald Trump mirror that of most other Republican Party candidates, including Florida governor and former Republican Party candidate Ron Desantis, echoing similar sentiments. Vivek Ramaswamy and Ron DeSantis dropped out of the Republican Party presidential primaries, leaving only Former President Donald Trump and Former South Carolina Governor Nikki Haley in the race.
Why is Trump Against CBDCs?
While speaking at the rally on Monday, former President Donald Trump described CBDCs as tyrannical, claiming it would give the federal government absolute control over citizens via their finances.
The public statements against CBDCs by the former president go beyond the New Hampshire rally—he had echoed similar intentions on more than one occasion, apparently inspired by Vivek Ramaswamy, the only Republican presidential candidate with a balanced framework for cryptocurrency regulation.
The Case Against CBDCs
While Central Bank Digital Currencies initially enjoyed widespread support from central banks and financial regulators worldwide, it was ultimately relatively unsuccessful due to opposition by legislators and members of the public in general.
A Central Bank Digital Currency, CDBC for short, is a centralized digital currency operated and issued by the central bank of a sovereign entity. Most CBDCs operate on permissioned blockchains that give the issuer absolute control over the currency operations.
Technically, CBDCs are significantly different from cryptocurrencies because of their centralized nature, failing an essential test for what cryptocurrencies are by definition. However, the centralization of CBDCs is only half the reason why most observers vehemently oppose the idea; it has even more fatal flaws.
For one, it takes away the finality of payment you get with paper currency or crypto, as the Central Bank may decide to withdraw CBDC tokens from circulation before reaching user wallets. Also, CBDCs remove the privacy protection that cryptocurrencies and paper money offer, as the Central Bank knows how much everyone is holding in digital tokens at any point in time.
From indiscriminate freezing of assets to possible limitations of how and where you can spend your money, CBDCs are indeed both privacy and security risks in the hands of a tyrannical government. While it is possible to regulate what Central Banks can or cannot do with user wallets, not having that possibility in the first place sounds like a better idea.
Republicans are United Against CBDCs
Former President Donald Trump is not the first prominent US politician to speak or take action against the use of CBDCs. On May 12, 2023, Governor Ron DeSantis, a former Republican Party Presidential Candidate and current Governor of the State of Florida, signed bills prohibiting the use of CBDCs in his state, officially making Florida the first state to ban CBDCs by law.
Prominent Republican US Senator Ted Cruz also introduced anti-CBDC legislation to the US Senate, seeking to prohibit the US Federal Reserve from developing a direct-to-consumer Central Bank Digital Currency.
You may also recall that the stance of the former President stance comes from that of another Republican Party Presidential, Candidate Vivek Ramaswamy, who was the only candidate with a cryptocurrency regulation framework in his manifesto.
With so much opposition to CBDCs in the United States, it remains unlikely that any establishment bill can scale through the legislature.
