A bill recognizing gold and silver coins as legal tender in Iowa was given a subcommittee hearing on Wednesday, but it isn’t considered ready for passage according to the senators who debated the idea.
Senate File 2273 is a “unique idea,” Republican State Sen. Dan Dawson said, but something other states are looking at as well.
Republican State Sen. Jason Schultz said he believes America has a “currency crisis” with threats from the $34 trillion of debt and an expanding coalition of countries that do not want to use the federal reserve notes.
Schultz said he believes states have the constitutional prerogative to take such action and called it a “legitimate idea.”
Representatives from the banks and credit unions expressed concerns, however. Both groups are officially registered as undecided, by Madison Grady with the Iowa Credit Union League said the group had questions about implementation and noted vaults at the credit unions are not intended to hold things of value for a long period of time.
“The bottom line is that we see this being a huge burden for other financial institutions, not just credit unions,” Grady said.
She added that based on conversations with consumers, utilization of gold and silver would be very low.
Mike Rozenboom of the Iowa Bankers Association said there are “all sorts of operational challenges” with taking gold and silver coins into deposited accounts.
Schultz said he did not put the bill on the agenda for the State Government Committee because he wanted to find out if he could bring it forward to caucus. Had the subcommittee gone well, Schultz was going to seek unanimous consent from Democrat Sen. Tony Bisignano to bring it forward.
Ultimately Schultz said the conversation needed to start earlier and people had to get on board earlier. Ideally, banks and credit unions would not hold gold in their vaults, he said.
So far the conversation had bypassed banks and credit unions, which Schultz said need to be included.
“That’s going to have to be dealt with,” he said. “We can’t go to committee with this here yet.”
Dawson said considering some cities were attempting to set up their own systems for cryptocurrency, which is “based upon nothing,” it might be a good idea to have currency out there based on an actual physical asset.
The issue will likely be studied in the summer and possibly considered next year.
