The Blubber

Trump pledges to prohibit the Federal Reserve from issuing a crypto coin,, per Bloomberg.

"Tonight, I am also reiterating my commitment to shield Americans from government tyranny," Trump declared on Wednesday in New Hampshire ahead of the state's upcoming primary election. "As your president, I will staunchly oppose the introduction of a central bank digital currency."

The Federal Reserve has not reached a decision on whether to introduce a fully digital version of the U.S. dollar, although it has been actively exploring the technological feasibility of such a move. Chair Jerome Powell has emphasized that any decision to pursue a central bank digital currency (CBDC) would require explicit approval from Congress and the executive branch.

The notion of a publicly accessible digital dollar has become increasingly politically charged. Florida Governor Ron DeSantis, a contender in Trump's primary, has adamantly rejected the establishment of a CBDC and has preemptively prohibited its use in his state. DeSantis has raised concerns that a digital dollar could potentially enable the federal government to monitor Americans' spending, drawing parallels to China's use of its own emerging CBDC for surveillance purposes.

While Fed officials have not finalized the design of a potential CBDC, a 2021 paper outlined a concept involving a token held in digital wallets managed by banks or other regulated financial entities, rather than permitting direct deposits at the central bank for ordinary Americans. This proposal suggested that banks would retain the responsibility of safeguarding transaction information, subject to reporting requirements for suspicious payments under anti-money laundering rules.

The Fed emphasized in the paper that striking a balance between protecting consumer privacy and ensuring transparency to deter criminal activities would be crucial for any CBDC. There is also a possibility that a digital dollar could be developed exclusively for interbank payments to, for example, reduce transaction costs across borders.