Donald Trump has vowed to stop the launch of a US central bank digital currency (CBDC) if he wins the next presidential election, slamming a potential digital dollar as a “dangerous threat to freedom”.
The 77-year-old is campaigning to become the Republican Party’s candidate in the November election and return to the White House for a second term.
Speaking in the state of New Hampshire last week, the former president told a crowd of supporters: “As your president, I will never allow the creation of a central bank digital currency.”
His intervention comes as CBDCs become an increasingly prominent topic for government authorities worldwide. Just a handful of nations have to date formally issued one. But China’s authorities continue to progress the rollout of a digital yuan, India is moving towards issuance of a digital rupee and the European Central Bank has entered a ‘preparation phase’ for a potential digital euro.
In the US the Federal Reserve released an eagerly-anticipated paper into the pros and cons of a potential digital dollar two years ago. But the central bank’s chair, Jerome Powell, has been non-committal on a digital dollar’s prospects.
CBDC: ‘dangerous threat to freedom’
“Tonight, I am also making another promise to protect Americans from government tyranny,” Trump said in New Hampshire, speaking against the backdrop of a slogan reading ‘Make American Great Again!’, on 17 January.
“As your president, I will never allow the creation of a central bank digital currency,” he said. He seemed slightly surprised by the crowd’s apparently CBDC-aware reaction. “You know about it? Oooh, I didn’t know you know so [much]… New Hampshire, very smart people. Very current.”
“You know what ‘they’ are doing,” he continued. “Such a currency would give the federal government – our federal government – the absolute control over your money. They could take your money, you wouldn’t even know it was gone. This would be a dangerous threat to freedom – and I will stop it from coming to America.”
Primary elections for both Republicans and Democrats will take place in New Hampshire this week (23 January).
Florida governor Ron DeSantis, who dropped out of the battle for the Republican nomination in the past week, is also an opponent of CBDC. He signed a bill to prohibit CBDC use within Florida last year and has championed the slogan ‘Big Brother’s Digital Dollar’.
RELATED ARTICLE US Fed asks 22 questions about potential digital dollar – our news story (21 January 2022) on the US central bank’s paper into the pros and cons of a potential digital dollar
CBDC issuance: political decision
The Fed released its ‘Money and Payments: the US Dollar in the Age of Digital Transformation’ consultation in January 2022 asking for public comment on more than 20 questions about a potential US CBDC.
The 40-page consultation was described as the ‘first step in a discussion of whether and how a CBDC could improve the safe and efficient domestic payments system’ and did not favour any policy outcome.
The paper made clear that the Fed does not intend to issue a CBDC without the backing of the executive branch and Congress, ‘ideally in the form of a specific authorising law’.
Powell told the Bank for International Settlements (BIS) Innovation Summit 2021 that ‘way more than half’ of the Fed’s 12 regional banks had ‘active work’ on CBDC. As an example, the Boston Fed was involved in a multi-year partnership with the MIT (Massachusetts Institute of Technology) Digital Currency Initiative to build and test a hypothetical CBDC.
Nikki Haley, a 52-year-old former South Carolina governor and Trump’s ambassador to the United Nations, is competing against Trump for the Republican presidential nomination. The presidential election itself will be on 5 November 2024.