Congress passes bill banning Federal Reserve from creating a CBDC
The legislation blocks the creation and issuance of a central bank digital currency (CBDC) without explicit congressional authorization, aiming to safeguard Americans’ financial privacy.
The bill aims to prevent unelected officials from developing a CBDC that could infringe on Americans’ financial privacy. It specifically prohibits the Federal Reserve from offering certain products or services directly to individuals and restricts the use of CBDCs for monetary policy.
Key provisions include prohibiting Federal Reserve banks from offering products or services directly to individuals, maintaining accounts on behalf of individuals, and issuing any form of CBDC without congressional approval.
It also restricts the use of CBDCs to implement monetary policy, ensuring that such measures preserve the privacy protections of physical currency.
The move follows concerns that a CBDC could be used to monitor and control financial transactions, similar to systems in place in other countries.
Chairman of the House Financial Services Committee, Patrick McHenry, supported the bill, highlighting concerns over financial surveillance. He cited examples from other countries, such as China’s use of a CBDC to monitor and control citizens’ spending habits.
McHenry said:
“This type of financial surveillance has no place in the United States.”
He stressed the bill’s importance in response to the Biden Administration’s push for CBDC research and development, which he argued could threaten financial privacy.
McHenry acknowledged Emmer and other co-sponsors, including French Hill and Alex Mooney for their efforts in advancing the legislation.
H.R. 5403 received broad support, reflecting widespread concern over the potential misuse of digital currency by governmental authorities. The bill’s passage marks a critical step in protecting financial privacy in the digital age.
Emmer emphasized that the bill is designed to prevent the federal government from following in the footsteps of authoritarian regimes that use digital currencies for surveillance.
The bill now moves to the Senate for consideration. If passed, it will significantly limit the Federal Reserve’s ability to implement a CBDC without legislative oversight, reinforcing Congress’ role in major financial decisions.
