The United States House Financial Services Committee is taking decisive steps to halt the introduction of a central bank digital currency (CBDC). Chairman Patrick McHenry recently announced the committee’s agenda. This includes the discussion of two crucial bills related to the potential digital dollar.
Digital Dollar Pilot Prevention Act and the Federal Reserve’s Stance
On September 20, the House Financial Services Committee will convene to deliberate on these bills, marking a pivotal moment in the ongoing CBDC debate. This is according to an announcement by Chairman Patrick McHenry
One of the bills in focus is the Digital Dollar Pilot Prevention Act, also known as H.R. 3712. This legislation, introduced by Representative Alex Mooney in May, holds the Federal Reserve accountable. It prevents the initiation of pilot programs for testing CBDCs without prior approval from Congress.
Although the Federal Reserve has denied making a decision on issuing a CBDC, asserting the need for an authorizing law, recent developments raise questions. The Federal Reserve of San Francisco has been actively recruiting technical experts for a CBDC project. This indicated that the digital dollar remains a viable consideration.
Amendment to the Federal Reserve Act
The second legislation under discussion is an amendment to the Federal Reserve Act. This amendment aims to restrict Fed banks from offering specific products or services directly to individuals. Also it prohibits the use of CBDCs for monetary policy and other purposes.
The bill states,
“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.”
Controversy Surrounding the Digital Dollar
The prospect of a digital dollar has sparked significant controversy within the United States. Prominent figures like presidential candidates Robert F. Kennedy Jr. and Ron DeSantis have voiced their concerns, citing potential threats to financial privacy. On the flip side, proponents argue that CBDC adoption could bolster the global relevance of the US dollar and boost cryptocurrency acceptance.
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