- A House committee has sanctioned a measure to halt the creation of a Central Bank Digital Currency (CBDC) in the U.S.
- The Act requires congressional approval for CBDC development and bars Federal Reserve initiatives that could be used for surveillance.
- The Federal Reserve is conducting initial research in anticipation of a potential CBDC, requiring a directive from the Presidential Office and statutory enactment from Congress.
A House committee has sanctioned a measure to halt attempts to create a Central Bank Digital Currency (CBDC) in the United States. The controversial decision ignited debates on Capitol Hill, primarily centered around fears of hindering progress and compromising U.S. standing in the global financial industry.
The panel led by Rep. Patrick McHenry (R-N.C.) advocated for the requirement of explicit congressional approval for any development of Central Bank Digital Currency (CBDC). Additionally, the Act bars any initiatives by the Federal Reserve that could potentially be utilized for surveillance, aiming to safeguard the privacy rights of individuals.
Robust opposition
Nonetheless, the leading Democrat on the panel, Rep. Maxine Waters (D-Calif.), expressed her disagreement with the decision. She argued that the Republicans’ stance against innovation could lead to the United States lagging behind other nations, especially China, in setting global standards for CBDCs. Furthermore, she warned that this could compromise the efficiency, convenience, and cost-effectiveness of future payment methods for Americans.
The proposed regulation has raised concerns about its impact on innovation, and the importance of its timing has been stressed. The House proceeded even with ongoing disputes over other vital financial changes. Republican legislators were firm in their opposition to the establishment of a CBDC.
The Senate, predominantly controlled by Democrats, could substantially resist this proposal. The Senate Banking Committee’s chairman, Sen. Sherrod Brown (D-Ohio), does not share the same interest in digital currencies as his Republican counterparts in the House.
Additionally, the Federal Reserve has been conducting initial research in anticipation of the potential creation of a Central Bank Digital Currency (CBDC). Michael Barr, the Deputy Chairman for Supervision, has explicitly stated that such a transformation would require a directive from the White House and statutory enactment from Congress.
