Texas Lawmakers Propose Having a Gold-Backed Digital Currency
Regulators across the world have been gearing for the launch of a central bank digital currency (CBDC), however, some experts believe that it could be just as manipulated by the central banks as the US dollar of other fiat currencies.
As a result, regulators from Texas have proposed for a digital currency that is exchangeable either with physical gold or cash.
Republican Senator Bryan Hughes has introduced the Senate Bill 2334 representing the first proposal for a state currency backed by Gold instead of the US dollar. This comes at a time when the confidence for Dollar is declining and talks of de-dollarization are on the rise.
Amid the rapidly changing geopolitical structure, some of the global economies have been working on settlements in USD challengers and alternatives. Amid these developments, Texas lawmakers are keen going back to something backed by precious metals like the Gold.
In the proposal, Republican Senator Bryen Hughes said that the digital currency shall represent a fraction of a Troy Ounce of Gold. ““The comptroller shall establish a digital currency backed by gold so that each unit of the digital currency issued represents a particular fraction of a troy ounce of gold held in trust,” the proposal notes.
It also adds that the holders of the digital currency should be able to easily transfer or assign it through any payment system. On behalf of the digital currency holders, the comptroller will act as a trustee maintaining “sufficient gold to provide gold redemption for all units of the digital currency that have been issued and not yet redeemed for money or gold.”
The proposal also clearly mentions that all of the digital currency reserves shall be backed 100% by Gold. Furthermore, to prevent any kind of liquidity manipulation of the digital currency, lawmakers have implemented the preventive measures.
Although unlimited purchases of the digital currency shall be allowed, the comptroller should acquire the same fractional amount in troy ounces of gold thereby ensuring the backing and stability of the digital currency.
It adds: “[The Controller should] buy a fractional number of troy ounces of gold equal to the number of units of the digital currency issued to the purchaser, and issue the purchaser a number of units of the digital currency equal to the amount of gold the comptroller purchases with the money received from the purchaser.”
Whenever a buyer is willing to sell their digital currency, the comptroller or the designated entity shall have an equal amount of cash to cover the funds. Besides, the holders can also access it for physical gold whenever required.