Missouri Senate Proposes Bill to Ban CBDC as Legal Tender

Missouri Senate Takes a Stand Against Central Bank Digital Currencies

On December 1, 2023, the Missouri Senate introduced a significant piece of legislation, Senate Bill 194 (SB 194), which aims to prohibit Central Bank Digital Currencies (CBDCs) from being recognized as legal tender within the state. This move comes amid rising concerns among legislators regarding the implications of CBDCs on financial privacy, monetary policy, and state sovereignty.

Overview of Senate Bill 194

Initiated by Senator Brattin, SB 194 encompasses several provisions that could reshape Missouri's financial landscape.

Prohibition of CBDCs as Legal Tender

The primary focus of the proposed legislation is to ensure that CBDCs are not accepted or used by public entities within Missouri. This is a crucial step in redefining the term 'money' in the Uniform Commercial Code to explicitly exclude these digital currencies.

Gold and Silver Reserves

Among the notable provisions is a requirement for the state treasurer to maintain gold and silver reserves equivalent to at least 1% of the state's total funds. This move not only underscores a return to tangible assets but also aims to provide a more stable financial base for Missouri's economy.

Tax Exemptions on Precious Metals

SB 194 also proposes amendments to the tax obligations on gold and silver. Specifically, it suggests exempting state income tax on capital gains derived from the sale or exchange of these precious metals. This provision encourages investment in gold and silver and supports the notion of returning to a more asset-backed monetary system.

Concerns About CBDCs

The legislation reflects a growing skepticism about CBDCs among some state legislators. Reasons for these concerns include:

• Financial Privacy: There are apprehensions that CBDCs could enable unprecedented levels of surveillance over individual spending.
• Monetary Policy Control: CBDCs could alter traditional monetary policy mechanisms and reduce the Federal Reserve's control over the money supply.
• State Sovereignty: The introduction of CBDCs might undermine state control over its financial transactions and policies.

Impact on Missouri’s Financial Policies

If passed, SB 194 could set a precedent for other states contemplating similar measures against CBDCs. By positioning itself as an opponent of digital currencies issued by central banks, Missouri aims to safeguard its financial autonomy and enhance the role of traditional assets in the state's economy.

Conclusion

The introduction of SB 194 marks a pivotal moment in Missouri's approach to digital currencies and financial regulation. As discussions continue, it will be interesting to observe the responses from both state lawmakers and the public regarding this significant legislation.