House passes bill blocking Federal Reserve from issuing CBDC

Last week, the U.S. House of Representatives passed a bill that would prohibit the Federal Reserve from issuing a central bank digital currency (CBDC).

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Unlike decentralized cryptocurrencies, like Bitcoin, a CBDC is a digital form of sovereign currency that is designed and issued by a central government and transacts on a digital ledger that is controlled by that government.

Specifically, this bill bars the Federal Reserve from directly issuing a CBDC to individuals, preventing the Fed from becoming a retail bank. It also prohibits the Fed from indirectly issuing a CBDC to individuals through intermediaries, preventing the issuance of a CBDC through our two-tier financial system.

It would also ensure that the Fed cannot use any CBDC to implement monetary policy. Further, it requires that Congress pass legislation authorizing any government-created digital dollar.

“For more than two years, we have worked to educate, grow support, and pass this important legislation, which prevents unelected bureaucrats from issuing a financial surveillance tool to fundamentally undermine our American values. My legislation ensures that the United States’ digital currency policy remains in the hands of the American people so that any development of digital money reflects our values of privacy, individual sovereignty, and free market competitiveness. This is what the future global digital economy needs. We are proud to have led this effort and thank my colleagues for their support,” U.S. Rep. Tom Emmer, the bill’s sponsor, said.

The legislation, called the CBDC Anti-Surveillance State Act, was approved in the House by a vote of 216 to 192.

Several organizations commended the bill’s passage, including the American Bankers Association.

“ABA believes strongly that a CBDC, defined as a digital form of central bank money that is widely available to the general public, is unnecessary in the United States and would present unacceptable risks and costs to the financial system. The dollar is already digital today, and it is unclear how issuing a CBDC would improve financial inclusion or achieve other laudable goals…the ABA welcomes and strongly supports H.R. 5403, the CBDC Anti-Surveillance State Act, which was introduced by Rep. Tom Emmer,” Kirsten Sutton, executive vice president of Congressional Relations and Legislative Affairs at ABA, said.

It now moves to the Senate for consideration.