The House of Representatives drew partisan lines in voting to pass a Republican-led bill blocking central bank digital currencies.
Lawmakers voted 216 to 192, with 213 Republicans supporting the CBDC Anti-surveillance Act. Three Democratic lawmakers voted in favor of the bill, and 192 Democratic lawmakers opposed it.
House Majority Leader Tom Emmer, R-Minn., has introduced legislation in September 2023 that would block the Federal Reserve from issuing such assets to individuals. CBDC is a cryptocurrency issued and regulated by a country’s central bank.
Emmer’s main motivation stems from concerns about widespread monitoring of financial transactions. Lawmakers previously said CBDCs are “government-controlled, programmable currencies that, if not designed to mimic cash, could give the federal government the ability to monitor Americans’ transactions and stifle politically unpopular activities.” Yes.
The bill passed the House Financial Services Committee in September amid strong criticism from Democrats. Maxine Waters (D-Calif.), a Democrat on the House Financial Services Committee, called legislation banning CBDCs “anti-innovation.”
Fed’s position
The Federal Reserve insisted it was “nowhere close” to recommending or even adopting CBDCs. Federal Reserve Chairman Jerome Powell told lawmakers that if the central bank were to adopt a CBDC, it would be done through the banking system.
“What we want, what the Fed wants, is to have a private account for every American, or for every American,” Powell said in March. “Only banks have accounts at the Fed and we will maintain that.”
The Federal Reserve has been exploring the possibility of issuing a CBDC and released a report last year examining the pros and cons of CBDC, but central bank officials have poured cold water on the idea in the past. Powell also said the Federal Reserve would not issue a CBDC without congressional approval.
The Heritage Foundation, a conservative group, has pressured lawmakers to pass CBDC legislation, urging them to co-sponsor it in February, warning that failure to do so would “negatively impact” their Heritage Action Scorecard scores. .
Sen. Ted Cruz, R-Texas, has also introduced a companion bill in the Senate that would ban CBDCs, endorsed by the Heritage Foundation and the Blockchain Association, among others. But legislation blocking CBDCs is unlikely to make much progress in the Senate, where Democrats hold a majority.
Investment bank TD Cowen said anti-CBDC legislation in the House of Commons could have a wider impact.
“We view such a ban as negative for the global dominance of U.S. banks and the global role of the U.S. dollar,” the investment bank said in a note Thursday. “This is because the ban applies to wholesale as well as consumer use. Since the stablecoin digital dollar can lose value while redemption is taking place, it could give a digitized euro or other currency an edge in being used in global trade. A digital euro will not face such threats.”
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