Gov. Ron DeSantis wants to ban the use of a central bank digital currency in Florida and called on other like-minded states to do the same.
Saying he supports laws to prevent the federal government from watching and controlling people’s finances, DeSantis called on the Legislature Monday to pass a bill that would ban the use of CBDC in the Sunshine State.
Establishing a CBDC would create a digital form of the U.S. dollar, which would be a liability of the Federal Reserve.
Currently, there are two types of money in use in the United States — the physical paper and coins issued by the federal government and the digital balances held by commercial banks at the Fed.
Last March, President Joe Biden issued an executive order for the Fed to explore the creation of a CBDC, which would convert the dollar into this digital currency.
While many Americans hold and use money in digital form, such as in bank accounts, on payment apps or using online transactions — a CBDC would differ in that it would be a liability of the Fed, not of a commercial bank.
“A CBDC is directly controlled and issued by the government to consumers and it provides the government with a direct view of all consumer activities,” DeSantis said.
According to the White House, a CBDC offers a variety of economic benefits.
“It could enable a payment system that is more efficient, provides a foundation for further technological innovation, facilitates faster cross-border transactions and is environmentally sustainable,” the White House said.
Additionally, a CBDC “could promote financial inclusion and equity by enabling access for a broad set of consumers. In addition, it could foster economic growth and stability, protect against cyber and operational risks, safeguard the privacy of sensitive data, and minimize risks of illicit financial transactions,” according to the White House.
DeSantis vehemently disagrees.
“This is something that is being proposed as being environmentally sustainable and a way to increase access to consumers that lack the means to join a traditional bank,” he said, “but as we have come to learn, any way that they can get into society to exercise their agenda they will do it.”
“So what the CBDC is all about is surveilling Americans and controlling the behavior of Americans,” DeSantis said. “And how do we know? Because we’ve seen this happen in other parts of the world. Just look no further than China to see the impacts of centralized digital currency. The Peoples Bank of China uses its central bank to monitor citizen behavior, allowing for surveillance of spending habits and cut off access to goods and services.”
He cited the recent bank failures of Silicon Valley Bank and Signature Bank, noting the federal government got around the law to back up the system.
“The deposits are protected by law up to $250,000 and above that it’s not protected,” he said. “Congress never changed that law and yet somehow the administration, the Fed and the Treasury are removing that cap for some of these banks,” he said. “And so that law won’t really be an impediment to them if they can get a CBDC and they will use that in ways that benefit their agenda.”
In blue state California, state Treasurer Fiona Ma on Monday asked the Biden administration to “calm nerves by fully protecting 100% of business and individual account deposits with FDIC coverage, until full confidence is restored in our banking system. Banks of all sizes — large, regional, and community — should be included.”
She said she received calls last week from small business owners after finding their SVB accounts were frozen, preventing them from paying bills and their employees.
“Small and midsize banks and credit unions are the heart and soul of our communities, she said in a statement. “Temporarily guaranteeing all deposits will ensure that these community institutions are shielded as much as possible from current economic volatility and uncertainty.”
DeSantis noted that actions that circumvent laws were expanding across the country.
“We now recognize there’s a concerted effort across America to backdoor provisions for the use of CBDC though individual state uniform commercial codes (UCC), intended to provide for state or governing laws for commercial transactions across state lines and is set by an independent commission of ‘experts’ to seek uniformity in state laws.”
He said legislation to apply recent recommended changes to the UCC has been introduced in about 20 states.
“Today, I’m here to call on the Legislature to pass legislation that expressly forbids the use of CBDC as money within Florida’s UCC,” he said at press conference in Panama City. “This will ensure that Florida continues to be a state that supports innovation in the financial sector through the market, while protecting against government surveillance of your personal finances.”
Additionally, he noted the global implications of such actions.
“Our legislation shouldn’t stop there,” he said. “Given the continued increase in Chinese influence in in worldwide affairs and in plans to adopt CBDC worldwide, our legislation would also prohibit any CBDC issued by a foreign reserve or government sanctioned central bank. This will ensure that any effort to adopt a worldwide digital currency will never occur in the state of Florida.”
State Chief Financial Officer Jimmy Patronis said “a CBDC is the cornerstone of a federal government that could track each and every transaction that happens in the world. Under a CBDC there would be no privacy and if there is no privacy, there are no rights.”
“In the same way Florida is fighting back against the Internal Revenue Service, we need to fight back against this program,” Patronis said in a statement.
DeSantis urged other red states to rally against the creation of a CBDC.
“I’m calling on like-minded states to adopt legislation into their UCCs and to reject any changes to their UCCs that would formally recognize a CBDC,” he said.
He said he spoke with Texas Lt. Gov. Dan Patrick, a Republican who is head of the state Senate about also passing anti-CBDC legislation.
“I do believe that Texas is going to do something similar to what Florida does,” he said. “And if we can get a groundswell of states to say ‘No, we’re not going to turn over this power to you’ — I think if enough states come up and say ‘No’ — it would be really difficult for Congress to ever enact something like this by statute.”
DeSantis, a Republican, is one of the top contenders for the GOP presidential nomination in 2024, although he has not declared his candidacy. The Florida Legislature is dominated by Republicans in both houses who agree with the governor’s conservative stance on social issues.
“I’m excited by our bill. We have already talked to the leaders in the Legislature. I think this is something that is going to happen and I look forward to being able to sign it into law later this year,” DeSantis said.
The Biden administration in September asked the Fed to continue its research, experimentation and evaluation of a CBDC. It also announced the creation of an interagency working group led by the Treasury Department to consider the potential implications of a CBDC in the United States.
The DeSantis administration said a CBDC as proposed by the Biden administration would diminish the role of community banks and credit unions since the currency would be a direct liability of the federal government, rather than of a chartered financial institution, and thus shrink market lending power.
“Ultimately, cash is king and if you can hold it in your hand you have power over that,” DeSantis said. “The minute it’s all digitized, somebody else is going to have control over that.”