Several authorities throughout the world are concerned about Central Bank Digital Currencies (CBDCs). In a quest for alternatives, Texas legislators decided to offer plans for a gold-backed alternative to compete with the US Central Bank (FED).
Legislation in the Texas House and Senate has been submitted to create state-issued gold-based digital money. These projects seek to provide an alternative to central bank digital currencies (CBDCs) for consumers and companies while also challenging the Federal Reserve’s dominance over the money supply.
Texan Politicians are Planning for an Alternative
Senate Bill 2334 and House Bill 4903 would mandate that the state controller develop a totally gold-based digital currency capable of being redeemed for cash or gold. Texas would store the gold in escrow for digital currency holders, providing them with an alternative to traditional fiat currencies and CBDCs.
A gold-based digital currency has the ability to compete with Federal Reserve notes and weaken its monopoly. These new digital currencies, by making gold freely available for frequent transactions, may result in a “reverse Gresham’s Law” effect, in which good money (gold and silver coins) drives out bad money (Fed notes).
Few Gold-Based Digital Currencies Already Exist
The gold-based digital currency has the potential to contribute to the Federal Reserve system’s demise by fighting it from the bottom up, fostering competition inside the monetary system and rendering its functions useless at the state and local levels.
The legislation is assigned to committees and must be approved by a majority vote to move forward in the legislative process. Despite being a novelty from the standpoint of the government, gold-based digital currencies have been accessible on the cryptocurrency market since at least January 2020.
The main digitized blockchain token is XAUT, which is administered by the same corporation that handles the USDT stablecoin (Tether). On the blockchain, XAUT already possesses the equivalent of R$2.5 billion in tokenized gold.