On May 2, a Texas House committee passed a bill that would create 100% reserve gold and silver-backed transactional currencies. This legislation, if enacted, would provide an option for individuals to conduct business in sound money and could create a viable alternative to a central bank digital currency (CBDC) while undermining the Federal Reserve’s monopoly on money.
HB4903, introduced by Rep. Mark Dorazio (R), would require the state comptroller to establish and provide for the issuance of gold and silver specie and establish digital currencies that are 100% backed by gold and silver. These digital currencies would also be 100% redeemable in cash, gold, or silver.
The comptroller would be required to authorize the Texas Bullion Depository as the issuer of gold and silver specie and ensure that holders may use the specie as legal tender to pay off debts or readily transfer the specie to another person. Physical gold and silver would be stored in a pooled account at the Texas State Bullion Depository to back the digital currency.
In practice, individuals would be able to purchase transactional currency representing the smallest fractions of physical gold or silver, which could be used to purchase gold or silver held in the already-open Texas Bullion Depository. Individuals would also be able to redeem their transactional currency for dollars, gold, or silver on demand.
This legislation is one of several bills introduced in the Texas legislature this year to promote sound money. It would create currency competition with Federal Reserve notes and provide a sound money-backed competitor if the Federal Reserve implements a CBDC.
A gold-backed digital currency would also create an alternative and allow individuals and businesses to avoid a CBDC. Digital currencies exist as virtual banknotes or coins held in a digital wallet on a computer or smartphone. A CBDC’s value is backed and controlled by the government, unlike traditional fiat currency.
The move towards a CBDC is rooted in the “war on cash,” which could create the potential for the government to track and control consumer spending. A digital currency issued by the government would also accelerate the path towards a surveillance state regime.
Creating gold and silver-backed digital currencies would take another step towards abolishing the Federal Reserve system by introducing competition into the monetary system. It would undermine the Federal Reserve’s monopoly by working to make its functions irrelevant at the state and local levels.
HB4903 will now move to the Calendars Committee, which determines which bills move to the House floor for a vote. Supporters of the bill have created an online tool to register support for the bill moving to the House for a debate and vote. Residents of Texas can submit their comments here.
