The U.S. House Financial Services Committee is advancing legislation aimed at preventing central banks from issuing digital currencies.
According to an announcement from Chairman Patrick McHenry, the committee will mark two bills regarding a potential digital dollar on September 20. Markup is a meeting where lawmakers discuss the details of a bill. This is a critical step before the legislation reaches the House of Representatives.
One of the bills is the Digital Dollar Pilot Prevention Act (H.R. 3712), which prohibits the Federal Reserve from launching a pilot program to test a CBDC without congressional approval. The bill was introduced in May by Rep. Alex Mooney.
The Federal Reserve recently denied making any decision on whether to issue a CBDC, claiming that it would “only issue a CBDC if there is an authorizing law in place.” However, over the past few months, the San Francisco Fed has been looking to fill technical positions on the CBDC project, suggesting that a digital dollar is still under consideration.
#new: President @PatrickMcHenry Announcing legislation to strengthen U.S. national security and prevent central banks from issuing digital currencies.
Learn more https://t.co/oy3oASJYkA
— Financial Services Republican (@FinancialCmte) September 16, 2023
The second piece of legislation is an amendment to the Federal Reserve Act that prohibits Federal Reserve Banks from providing certain products or services directly to individuals and prohibits the use of CBDC for monetary policy and other purposes.
“The Federal Reserve shall not provide central bank digital currency or any other digital asset with a substantially similar name or label to individuals indirectly through a financial institution or other intermediary,” the bill reads.
The prospect of a digital dollar has sparked controversy in the United States. Presidential candidates Robert F. Kennedy Jr. and Ron DeSantis have publicly opposed establishing a CBDC in the country, citing financial privacy concerns. Proponents of a CBDC claim it will help the United States maintain the dollar’s global influence and boost cryptocurrency adoption.
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