The United States House Financial Services Committee is advancing legislation designed to hinder the development of a central bank digital currency (CBDC). Chairman Patrick McHenry announced that the Committee is set to mark up two bills related to a potential digital dollar on September 20th, marking a pivotal step before legislation can proceed to the House floor.
One of these bills is the Digital Dollar Pilot Prevention Act, also known as H.R. 3712, which prevents the Federal Reserve from initiating pilot programs to test CBDCs without prior congressional approval. This legislation, introduced by Representative Alex Mooney in May, seeks to ensure that any progress toward a CBDC is subject to appropriate oversight.
Despite recent statements by the Federal Reserve emphasizing the need for an authorizing law before pursuing a CBDC, the Federal Reserve of San Francisco has actively sought technical expertise for a CBDC project in recent months, suggesting that the concept of a digital dollar remains on the table.
The second piece of legislation involves an amendment to the Federal Reserve Act. It prohibits Federal Reserve banks from offering specific products or services directly to individuals and also restricts the use of CBDCs for monetary policy or other purposes. The bill explicitly states that Federal reserve banks cannot indirectly offer a central bank digital currency, or any similar digital asset, to individuals through financial institutions or intermediaries.
The notion of a digital dollar has sparked contentious debate in the United States. Notably, presidential candidates Robert F. Kennedy Jr. and Ron DeSantis have voiced concerns about the potential establishment of a CBDC, primarily focusing on financial privacy issues. Proponents of CBDCs argue that they could help the United States maintain the global significance of the dollar and foster greater adoption of cryptocurrencies. The outcome of these legislative efforts will likely have a profound impact on the future of digital currency in the United States.
