Lawmakers in the State of North Carolina have passed a new bill that bans using central bank digital currency (CBDC) by individuals or government agencies in the state.
The bill was passed on May 3, with members of the legislative house attending the plenary and voting unanimously in favor of it. Introduced in April, it took less than a month to become law after scrutiny from the House committee and a final vote by members.
📢 BREAKING: #NorthCarolina House Unanimously Passes HB690: Banning Payments in #CBDC's & Prohibiting NC Participation in Any CBDC Testing 🚨
-Referred to State Senate
-Thank you all who worked on this in record time#NCPOL #Bitcoin #Multistate #Tech pic.twitter.com/ReWJGZ82XB
— Dan Spuller (@DanSpuller) May 4, 2023
Aside from prohibiting the use of CBDCs, the bill prohibits the Federal Reserve from using the state as a testing hub for a CBDC pilot. The bill, sponsored by Republican lawmakers, argues that an attempt to introduce CBDCs is aimed at “surveilling Americans and controlling behavior of Americans.”
“No State Agency nor the General Court of Justice shall accept a payment using central bank digital currency,” the bill read. “No State Agency nor the General Court of Justice shall participate in any test of central bank digital currency by any Federal Reserve branch.”
Recently, there have been growing calls against developing a digital dollar as currency in the U.S., stoked by privacy concerns. Florida Governor Ron DeSantis lent his voice to the grumblings against a CBDC, urging his state’s legislature to prohibit their usage.
“You’re opening up a major can of worms, and you’re handing a central bank huge, huge amounts of power,” DeSantis said.
It is crucial to note that, according to the law, it appears that private citizens are not precluded from using a CBDC for payments in the event that such currency is launched. For the bill to pass into law, it has to sail through the rigors of scrutiny from the Senate and receive consent from the governor.
At the federal level, both Tom Emmer and Ted Cruz have introduced bills in the House of Representatives and the Senate for a blanket ban on CBDCs, saying that they could “grease the slippery slope to financial slavery and political tyranny.”
State of the digital dollar
As the rest of the world marches on with the exploration of CBDCs, the U.S. opted to remain on the sidelines until a directive from President Joe Biden orders federal agencies to explore the prospects of a digital dollar. The recent probing of a national digital currency stems from a decline in the use of cash and the meteoric rise of virtual currencies.
“A CBDC might fill that gap and it might also create more competition, which could bring down the costs of digital payments in the U.S. and provide alternative options,” Eswar Prasad, professor of trade policy at Cornell University, said.
In November 2022, The New York Federal Reserve Bank launched a 12-week pilot program with a handful of commercial banks to test the viability of a digital dollar.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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