The U.S. House Financial Services Committee is currently a battleground for discussions concerning the possible launch of a Central Bank Digital Currency (CBDC) by the Federal Reserve.
Today, Maxine Waters, a Democratic representative from California, sharply criticized a bill reintroduced by Republican Rep. Tom Emmer of Minnesota. The bill is looking to prevent the Federal Reserve from creating a CBDC.
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Last week, Republican Rep. Tom Emmer of Minnesota rolled out the “CBDC Anti-Surveillance State Act,” also known as HR 5403. According to a statement from Emmer, this bill, which is supported by 50 Republican co-sponsors, would prevent the Federal Reserve from directly issuing a CBDC to individuals.
Additionally, it would stop the Fed from indirectly making a CBDC available through a third party.
Waters, who has served as a former chair of the Committee, voiced concerns that the bill’s partisan nature could hamper technological advancements in finance and put the U.S. at a disadvantage globally.
“Unfortunately, Republicans are marking up one bill that is not bipartisan. It will keep the United States behind other countries, including China, as they race forward to develop a global standard for central bank digital currencies,” she warned. “At this point, nobody fully understands the potential benefits and challenges of CBDCs, or how their implementation could affect the preeminence of the U.S dollar and global finance more broadly. That is why the Biden Administration and the Federal Reserve are researching this.”
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Waters further argued that the bill put forth by the Republicans could slow down ongoing research efforts, which in turn could affect the country’s ability to keep up with financial technological changes.
“The Republican bill before us today would stifle that research and prevent us from moving forward even if it means that the dollar loses its status as the world’s reserve currency,” she conveyed her point to the Committee. “And even if it means that U.S. citizens lose out on faster, cheaper, and simpler payments.”
This presents a concern for the U.S., as it may lose the opportunity to set global standards in what could be a major financial development.
Maxine Waters and the Committee’s Work on US Crypto and Other Financial Matters
Before concluding her remarks, Waters expressed disappointment in what she saw as a lack of willingness to innovate on the part of Republicans.
“I am disappointed that Republicans have taken such a deeply anti-innovation stance,” she commented.
Despite disagreements, Waters acknowledged that the Committee’s recent meeting was largely productive. She highlighted the Committee’s progress in reaching a consensus on various matters, including U.S. banks reducing risks in their dealings with the Caribbean and other regions, compliance with sanctions concerning Russia and Belarus, and the imposition of sanctions on foreign companies that facilitate spyware targeting U.S. national security personnel.
Other Legislative Efforts and Positions on CBDC in the U.S.
Another bill up for discussion on today targets a more bipartisan approach. Known as the “Power to Mint Act,” H.R. 3402 is sponsored by Democratic Rep. Jake Auchincloss of Massachusetts and Republican Rep. French Hill of Arkansas. The bill would mandate that the Federal Reserve seek approval from Congress before moving ahead with the issuance of a CBDC.
It’s not just in Congress where opinions on CBDCs are strong. Florida Governor Ron DeSantis, who is also a presidential candidate, signed a bill in May that prohibits the use of a federal CBDC in Florida. Another presidential hopeful, Vivek Ramaswamy, has likewise expressed firm views against CBDCs.
While discussions are ongoing, the potential introduction of a CBDC by the Federal Reserve evidently has both supporters and detractors within the U.S. House Financial Services Committee. The implications for the U.S. in terms of global financial technology advancements and crypto regulation remain important topics that lawmakers will have to continue to grapple with.
Update: Committee Greenlights Bill to Halt CBDC Development
The House Financial Services Committee has given the green light to CBDC Anti-Surveillance State Act to block the introduction of a U.S. Central Bank Digital Currency (CBDC). The bill will now move to the floor of the U.S. House of Representatives for further consideration.
Rep. Patrick McHenry (R-N.C.), who chairs the Committee, stated that the bill will ensure that “any U.S. CBDC must be explicitly authorized by Congress.” He further added that the legislation’s goal is to “protect Americans’ privacy and our financial system from the risks a CBDC would pose.”
The bill will halt any pilot programs for a CBDC before they are even proposed. It also intends to prevent the Federal Reserve from issuing a digital currency that could be used to surveil citizens.
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