Is the Fed about to Launch a Financial “Death Star?”

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In Star Wars, the Death Star had the ability to destroy entire planets and was meant to intimidate the rebellion into submission. According to Congressman Warren Davidson (R-OH), a central bank digital currency (CBDC) would pose a similar threat with its ability to “corrupt…[coerce] and control” Americans through their money. Bethan Moorcraft reports on Rep. Davidson’s comments on CBDCs, writing:

A U.S. lawmaker has accused the Federal Reserve of quietly working on a central bank digital currency (CBDC) — which he likens to “building the financial equivalent of the Death Star.”

For the uninitiated, the Death Star is a moon-shaped space station and superweapon featured in the Star Wars franchise.

While a CBDC would not share the Death Star’s ability to annihilate planets with a super laser, Rep. Warren Davidson of Ohio believes it would create similar authoritarian powers for the nation’s central bank to “corrupt … [coerce] and control” Americans through their money.

A CBDC would essentially be a government-issued and -backed “digital dollar” that would be widely available to the general public.

Interest in CBDCs has grown alongside a wave of technological advances in private-sector financial products — including digital wallets, mobile payment apps, and new digital assets such as cryptocurrencies and stablecoins.

The Fed believes a CBDC could have many potential benefits, including: giving U.S. citizens a convenient, electronic form of central bank money, while also supporting faster, cheaper payments and expanding consumer access to the financial system.

But along with those benefits, others argue a CBDC poses issues of autonomy and control. It could essentially create a direct line from the central bank to individual people, meaning that the federal government could have the ability to track every transaction going into and coming out of people’s accounts. A CBDC could also be programmable with built-in rules, meaning that the government could impose restrictions on the use of the money.

Action Line: A CBDC would give the federal government unprecedented control over your money, with the ability to ration or prohibit certain purchases, and even the ability to remove money from your account if you’re not using it fast enough. When you need help with your money, click here.