In a significant development, the United States House Financial Services Committee is taking decisive steps to address the issuance of a central bank digital currency (CBDC).
Chairman Patrick McHenry has announced that the Committee is scheduled to convene on September 20th for the markup session of two bills pertinent to the potential digital dollar.
Markups are pivotal sessions during which lawmakers meticulously deliberate the intricacies of proposed legislation. This process paves the way for the bills’ progression to the House floor.
CBDC Legislation Overview
One of the bills under scrutiny is the Digital Dollar Pilot Prevention Act, designated as H.R. 3712. This legislation by Representative Alex Mooney aims to prevent the Federal Reserve from testing CBDC pilot programs. Such initiatives would require explicit authorization from Congress.
This underscores the Committee’s intention to assert its role in shaping the nation’s monetary policy. Despite the Federal Reserve’s recent assertion that any CBDC issuance would necessitate an authorizing law, signs of progress continue to emerge.
The Federal Reserve of San Francisco has been actively recruiting technical expertise for a CBDC project over the past few months, suggesting that the prospect of a digital dollar remains on the table.
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The second legislative proposal under consideration pertains to an amendment being made to the Federal Reserve Act. This proposed amendment aims to prohibit Federal Reserve banks from directly offering specific products or services to individuals.
The use of CBDCs for monetary policy and other purposes would also be subjected to restrictions as outlined in the bill. The specific provisions of the bill explicitly state:
“A Federal Reserve Bank shall not offer a central bank digital currency or any digital asset that is substantially similar under any other name or label, indirectly to an individual through a financial institution or other intermediary.”
However, the introduction of these bills and the ongoing debate surrounding CBDCs have ignited controversy within the United States.
Moreover, prominent figures like presidential candidates Robert F. Kennedy Jr. and Ron DeSantis have voiced their opposition to the establishment of a CBDC, citing concerns over financial privacy.
Conversely, proponents of CBDCs contend that such a digital currency could bolster the global relevance of the US dollar. Simultaneously, they argue that it could foster wider adoption of cryptocurrencies.
As the Committee prepares for its markup session, the fate of these bills and the future of CBDCs in the United States hang in the balance.
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