Utah is against central bank digital currencies – what does that mean?

10 February 2024 | 02:21

Utah is becoming the latest state to take action to exclude central bank digital currency (CBDC) from the definition of money. The HB164 bill, which has received final approval from the Senate, specifies that CBDC is not legal tender or money according to state regulations. This could create significant obstacles for the use of CBDC in Utah.

HB164, introduced by Rep. Tyler Clancy and sponsored by Sen. Michael Kennedy, also changes the definition of money in the Utah Code to exclude central bank-issued digital currency. Similar bills have already been approved in Indiana and Florida.

However, history shows that state legislation may have limited impact on federal programs. Examples of this are the legalization of marijuana in California and the Real ID Act, which faced resistance from states during implementation.

Central bank-issued digital currencies differ from peer-to-peer cryptocurrencies such as bitcoin in that their value is backed and controlled by the government. Government-backed digital currencies are intended to offer a secure and convenient alternative to physical cash, but also give the government greater control over consumer spending.

The elimination of cash provides the government with the ability to track and control transactions. Government-issued digital currency can give central authorities even greater control over the economy. China has already introduced a pilot program for its digital yuan, which allows authorities full control over payments.

Similar concerns arise regarding the potential introduction of a digital euro. Economists are worried about the consequences of introducing central bank-issued digital currencies and the potential increase in government surveillance of citizens.

In the case of HB164, the final decision rests with Governor Spencer Cox, who will have 20 days to make a decision. If the bill is passed, CBDC will be excluded from the definition of money in Utah, which could create significant obstacles for its use.

Whether this legislation will achieve the desired effects and halt the development of central bank-issued digital currencies remains an unanswered question. Only time will tell how state legislation will impact the future of CBDCs in the United States.