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The United States House Financial Services Committee is taking steps to advance legislation aimed at limiting the development of a central bank digital currency (CBDC).
Chairman Patrick McHenry announced that the committee will conduct markups for two bills related to the potential digital dollar on September 20. During markups, lawmakers discuss the specifics of a bill, which is a crucial stage before the legislation can progress to the House floor.
One of the bills, known as the Digital Dollar Pilot Prevention Act or H.R. 3712, seeks to prevent the Federal Reserve from initiating pilot programs to test CBDCs without obtaining approval from Congress. Representative Alex Mooney introduced this legislation in May.
While the Federal Reserve has recently stated that it has not yet decided whether to issue a CBDC, emphasizing that any such move would require authorization from the law, the Federal Reserve of San Francisco has been actively recruiting technical positions for a CBDC project over the past several months, indicating ongoing consideration of the digital dollar.
The second piece of legislation is an amendment to the Federal Reserve Act. It aims to restrict Fed banks from directly offering specific products or services to individuals and to prohibit the use of CBDCs for monetary policy and other purposes.
One section of the bill reads, “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.”
The possibility of a digital dollar has sparked debate in the United States. Presidential candidates Robert F. Kennedy Jr. and Ron DeSantis have expressed concerns about the introduction of a CBDC in the country, citing worries about financial privacy. Supporters of CBDCs argue that they could help maintain the global relevance of the US dollar and promote the adoption of cryptocurrencies.
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