The United States House Financial Services Committee is taking steps to push forward legislation that aims to prevent the issuance of a central bank digital currency (CBDC). Chairman Patrick McHenry announced that the Committee will mark up two bills related to a potential digital dollar on September 20. Markups are sessions in which lawmakers discuss the details of a bill, making it an essential step before the legislation moves to the House floor.
One of the bills is called the Digital Dollar Pilot Prevention Act (H.R. 3712), introduced by Representative Alex Mooney in May. This bill specifically prohibits the Federal Reserve from initiating pilot programs to test CBDCs without approval from Congress. Its intent is to ensure that any decisions regarding a CBDC are made collectively and with proper oversight.
Meanwhile, the Federal Reserve has stated that it has not made any decision on whether to issue a CBDC. The institution has made it clear that it would only proceed with the issuance of a CBDC if authorized by law. However, the Federal Reserve of San Francisco has been actively seeking technical positions for a CBDC project in recent months, suggesting that the possibility of a digital dollar is still being considered.
In addition to the Digital Dollar Pilot Prevention Act, the Committee will also review an amendment to the Federal Reserve Act that restricts Fed banks from directly offering certain products or services to individuals and prohibits the use of CBDCs for monetary policy purposes.
The prospect of a digital dollar has sparked controversy in the United States. Presidential candidates Robert F. Kennedy Jr. and Ron DeSantis have expressed their opposition to the establishment of a CBDC in the country, citing concerns about financial privacy. However, supporters of CBDCs argue that it could help to maintain the global relevance of the US dollar and promote the adoption of cryptocurrencies.
The discussion around a potential digital dollar highlights the growing interest and debate surrounding CBDCs globally. Many central banks and governments around the world are exploring the possibility of issuing their own digital currencies, driven by factors such as financial efficiency, payment modernization, and the increasing popularity of cryptocurrencies. As governments and regulators continue to scrutinize the potential risks and benefits, it remains to be seen how the future of CBDCs will unfold on a global scale.
In conclusion, the United States House Financial Services Committee is actively working on legislation aimed at preventing the issuance of a central bank digital currency. The Committee will mark up two bills related to a potential digital dollar, one of which aims to restrict the Federal Reserve from conducting pilot programs without congressional approval. The discussion and controversy surrounding the digital dollar reflect the wider global interest in CBDCs and the potential implications they may have on the future of finance. As governments and central banks continue to explore the possibilities and challenges of CBDCs, the digital currency landscape is likely to undergo significant transformations in the years to come.
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