The Texas House and Senate recently introduced bills that would establish a state-issued, gold-backed digital currency, Schiff Gold reported.
The outlet added, “Enactment of this legislation would create an option for people to transact business in sound money, set the stage to undermine the Federal Reserve’s monopoly on money and create a viable alternative to a central bank digital currency (CBDC).”
On March 10, Republican Senator Bryan Hughes proposed Senate Bill 2334 (SB2334). On the same day, a similar bill, House Bill 4903 (HB4903), was submitted by Republican Representative Mark Dorazio.
According to the proposed law, the state comptroller must issue a digital currency that is fully backed by gold and fully redeemable in cash or gold. The comptroller would also be responsible for developing a system for regularly transacting with this digital currency guaranteed by gold.
“In establishing the digital currency the comptroller shall establish a means to ensure that a person who holds the digital currency may readily transfer or assign the digital currency to any other person by electronic means.”
“The trustee shall maintain enough gold to provide for the redemption in gold of all units of the digital currency that have been issued and are not yet redeemed for money or gold.”
Schiff Gold reported:
In practice, individuals would be able to purchase digital currency from the state. The state would then use the money to purchase gold that would be held in the Texas Bullion Depository or another secure vault. Individuals would be able to redeem their digital currency for dollars or gold.
A gold-backed digital currency would create an alternative and allow individuals and businesses to avoid a CBDC.
Digital currencies exist as virtual banknotes or coins held in a digital wallet on your computer or smartphone. The difference between a central bank (government) digital currency and peer-to-peer electronic cash such as bitcoin is that the value of the CBDC is backed and controlled by the government, just like traditional fiat currency.
At the root of the move toward a CBDC is “the war on cash.” The elimination of cash creates the potential for the government to track and even control consumer spending.
Nigeria is already trying to get people to accept its CBDC (with a great deal of resistance), and China, India, and the US have all launched pilot programs to test CBDCs.
Imagine if there was no cash. It would be impossible to hide even the smallest transaction from the government’s eyes. Something as simple as your morning trip to Starbucks wouldn’t be a secret from government officials. As Bloomberg put it in an article published when China launched a digital yuan pilot program in 2020, digital currency “offers China’s authorities a degree of control never possible with physical money.”
The government could even “turn off” an individual’s ability to make purchases. Economist Thorsten Polleit outlined the potential for Big Brother-like government control with the advent of a digital euro in an article published by the Mises Wire. As he put it, “the path to becoming a surveillance state regime will accelerate considerably” if and when a digital currency is issued.
A gold-backed digital currency would create an alternative to CBDCs.
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