Key takeaways
- Legislation authorizing the formation of a state-issued digital currency backed by gold was put forth by the Texas House and Senate.
- The law also requires the comptroller to set up a system for regular transactions using this gold-backed digital currency.
Legislation authorizing the formation of a state-issued digital currency backed by gold was put forth by the Texas House and Senate. The action is viewed as a threat to the Federal Reserve’s monopoly on money and a substitute for a prospective digital currency issued by a central bank.
Republican legislators Bryan Hughes and Mark Dorazio introduced Senate Bill 2334 and House Bill 4903, which call on the state comptroller to establish a totally gold-backed digital currency that can be redeemed for either cash or gold.
The law also requires the comptroller to set up a system for regular transactions using this gold-backed digital currency. To guarantee the redemption of digital currency in gold, the state of Texas would keep the gold as a trustee on behalf of the currency’s owners.
The state would use the money from the digital currency sales under the proposed legislation to purchase gold stored in safe vaults like the Texas Bullion Depository. Then, digital currency owners could exchange their money for dollars or gold. The law also mandates that digital currency must be simple to assign or transfer to any other individual electronically.
If this legislation is approved, it may give consumers a choice to carry out transactions using reliable money, which might threaten the Federal Reserve’s authority over the US monetary system.
Governments worldwide are looking increasingly into using digital currencies, with some even testing out central bank digital currencies (CBDCs). Concerns have been voiced, meanwhile, concerning the possibility that digital currencies could be used as instruments for greater governmental surveillance and control over the financial dealings of the populace.
A gold-backed digital currency is one possibility being suggested as a replacement, which would give people and businesses another way to use reliable money and challenge the Federal Reserve’s control over the money supply. In Texas, a law has been presented to establish a state-issued digital currency backed by gold and exchangeable for cash or gold.
The so-called “war on cash,” which aims to abolish physical currency and enable more governmental tracking and control of consumer spending, is sometimes linked to the movement toward CBDCs. While China, India, and the US have all started pilot programs to test their own digital currency, Nigeria is already working to convince people to embrace the CBDC.
The abolition of cash, according to critics, would make it impossible to conceal even the tiniest transactions from official inspection, potentially resulting in a loss of privacy and greater governmental control. The introduction of a digital euro, according to economist Thorsten Polleit, might hasten the transition to a surveillance state regime.
