OKLAHOMA CITY, Okla. (March 28, 2023) – Last week, the Oklahoma House passed a bill that would ban some brick-and-mortar businesses and government agencies in the state from requiring payment in central bank digital currency (CBDC).
Rep. Clay Staires (R) introduced House Bill 1633 (HB1633) on Feb. 6. Under the proposed law, businesses providing “basic needs, selling or offering for sale goods or services during regular business hours” would be prohibited from requiring payment by a central bank digital currency. It would also bar them from prohibiting the use of cash.
“Businesses providing basic needs” is defined as businesses selling “basic life essential goods or services” including grocery stores, utility companies, internet companies, pharmacies, and insurance companies.
State and local government agencies in Oklahoma would be bound by the same rules.
On March 23, the House passed HB1633 by a 79-11 vote.
In effect, the enactment of HB1633 would shield Oklahomans from being required to use a central bank digital currency when dealing with state and local agencies, or making purchases of “basic needs.”
While HB1633 requires businesses providing basic needs and government agencies to accept cash as legal tender, it does not mention gold or silver, but under state law, gold and silver are considered legal tender in the state of Oklahoma. That means businesses would also be able to accept gold and silver, although there needs to be a mechanism to differentiate between the face value and market value of gold and silver coins.
CENTRAL BANK DIGITAL CURRENCIES (CBDC)
Digital currencies exist as virtual banknotes or coins held in a digital wallet on your computer or smartphone. The difference between a central bank (government) digital currency and peer-to-peer electronic cash such as bitcoin is that the value of the digital currency is backed and controlled by the government, just like traditional fiat currency.
Government-issued digital currencies are sold on the promise of providing a safe, convenient, and more secure alternative to physical cash. We’re also told it will help stop dangerous criminals who like the intractability of cash. But there is a darker side – the promise of control.
At the root of the move toward government digital currency is “the war on cash.” The elimination of cash creates the potential for the government to track and even control consumer spending.
Imagine if there was no cash. It would be impossible to hide even the smallest transaction from the government’s eyes. Something as simple as your morning trip to Starbucks wouldn’t be a secret from government officials. As Bloomberg put it in an article published when China launched a digital yuan pilot program in 2020, digital currency “offers China’s authorities a degree of control never possible with physical money.”
The government could even “turn off” an individual’s ability to make purchases. Bloomberg described just how much control a digital currency could give Chinese officials.
The PBOC has also indicated that it could put limits on the sizes of some transactions, or even require an appointment to make large ones. Some observers wonder whether payments could be linked to the emerging social-credit system, wherein citizens with exemplary behavior are ‘whitelisted’ for privileges, while those with criminal and other infractions find themselves left out. ‘China’s goal is not to make payments more convenient but to replace cash, so it can keep closer tabs on people than it already does,’ argues Aaron Brown, a crypto investor who writes for Bloomberg Opinion.”
Economist Thorsten Polleit outlined the potential for Big Brother-like government control with the advent of a digital euro in an article published by the Mises Wire. As he put it, “the path to becoming a surveillance state regime will accelerate considerably” if and when a digital currency is issued.
In 2022, the Federal Reserve released a “discussion paper” examining the pros and cons of a potential US central bank digital dollar. According to the central bank’s website, there has been no decision on implementing a digital currency, but this pilot program reveals the idea is further along than most people realized.
HB1633 will move to the Senate for further consideration. At the time of this report, the bill had not been referred to a Senate committee. Once it receives a committee assignment, it must get a hearing and pass by a majority vote before moving forward in the legislative process.