- Two Texas senators have called for a gold-backed U.S. CBDC
- Bryan Hughes and Mark Dorazio have both said that a CBDC should have 100% solid backing and not be based on fiat currency
- Holders would be able to swap their digital gold for the real thing
Two Texas senators have dialed back the clock with their suggestions for a Central Bank Digital Currency – they want one based on gold. Senate Bill 2334, introduced by Senator Bryan Hughes, and House Bill 4903, introduced by Representative Mark Dorazio, together represent the first proposal for a state currency backed by the precious metal in a move that would essentially see the U.S. go back on the gold standard, which was done away with for good in 1971. The move comes just weeks after Florida Governor Ron DeSantis called for any U.S. CBDCs to be banned in the state.
Gold Standard to Return?
The two bills would see the Texas Currency Comptroller establish a digital currency backed by gold, with each digital coin represented by a fraction of a troy ounce of gold held in trust. The bill further requires the comptroller to create a system that enables digital currency holders to easily transfer or assign their currency to others via any payment system.
Additionally, the comptroller would be responsible for serving as a trustee and fiduciary on behalf of digital currency holders. This would ensure that there is enough gold available to facilitate the redemption of all digital currency units that have been issued but not yet redeemed for money or gold.
Digital-physical Swaps
Importantly, holders of the gold-backed CBDC can swap out their virtual gold for the real thing via any authorized agent, with the redemption involving the use of bars or coins of standard sizes, with any fractional remainders paid in cash to facilitate the transaction.
While a gold-backed CBDC will satisfy some elements of the political sphere, it’s unlikely that it will get much traction in a world where governments have become wedded to debt-ridden fiat currencies.
