The House Financial Services Committee recently passed
legislation to restrict the federal government’s ability to introduce a U.S. central
bank digital currency (CBDC), drawing support from the financial services
industry.
H.R. 5403, also known as the “CBDC Anti-Surveillance State
Act,” passed by a vote of 27-20, with amendments intended to ensure the
country’s central banks are prohibited from issuing digital assets of any kind.
Rep. Tom Emmer (R-Minn.) introduced the bill in September
with support from 67 Republican co-sponsors and zero Democrats. The measure
also gained support from financial trade associations, as well as other advocacy
groups. The bill drew opposition from Democrats who framed it as being about “anti-innovation”
rather than “anti-surveillance.”
The bill states, “A federal reserve bank shall not offer a
central bank digital currency, or any digital asset that is substantially
similar under any other name or label, indirectly to an individual through a
financial institution or other intermediary.”
The measure further prohibits the Federal Reserve and the
Federal Open Market Committee from using “any central bank digital currency, or
any digital asset that is substantially similar under any other name or label,
to implement monetary policy.”
Emmer noted during his testimony before the committee that
the bill is something he has worked on for at least three years. He went on to
characterize the bill as a means of halting “this administrative state under
President Biden from issuing a financial surveillance tool that will undermine
the American way of life,” comparing it to the central bank digital currency issued
by China, which allows the government to track transactions and freeze
citizens’ bank accounts.
Countering Emmer’s assertion, House Ranking member Maxine
Waters (D-Calif.) contended the bill would threaten the status of the U.S. dollar
as the principal global reserve currency and would “give China the reins to set
the global standard for central bank digital currencies.”
“We don’t know at this point how the introduction of CBDCs
could shape the global financial landscape,” Waters said in her testimony. “…
Republicans are making baseless attacks against a CBDC that does not even
exist.”
Waters and Rep. Stephen Lynch (D-Mass.) introduced
amendments stipulating that the measure should not take effect unless the U.S. Treasury
Secretary reports to Congress that the absence of a U.S. central bank digital
currency would not enable the Chinese Yuan to replace the U.S. dollar as the
principal global reserve currency. These amendments were struck down along
party lines.
Among the bill’s supporters are the Independent Community
Bankers of America (ICBA) and the American Bankers Association, both of which
oppose the creation of a central bank digital currency.
“ICBA and the nation’s community banks strongly oppose the
creation of a U.S. central bank digital currency, which would disintermediate
community banks, reduce credit availability, and undermine consumer privacy,”
ICBA President and CEO Rebeca Romero Rainey said in a statement. “By barring
the Federal Reserve from issuing a U.S. CBDC to consumers, the CBDC
Anti-Surveillance State Act would avoid the unnecessary risks to consumers and
small businesses that a U.S. CBDC would pose. We encourage Congress to continue
advancing this important legislation.”