House Republicans are teeing up what is shaping up to be a key feature of the GOP’s Federal Reserve agenda if it controls Washington in 2025: blocking the launch of a new digital dollar. The Republican-led Financial Services Committee today will vote on legislation that would restrict the Fed from moving ahead with a central bank digital currency, even as other countries roll forward. It’s the latest move by Republicans to make hay of the issue and to play up potential government surveillance concerns in particular. The shift is a boon to private cryptocurrency issuers and banks that have also pushed back. The Blockchain Association, which represents the crypto industry, is applauding the House moves this week. Florida Gov. Ron DeSantis, who enacted CBDC restrictions in Florida, has trashed the idea of a digital dollar on the campaign trail and vowed to ban it if elected president. The conservative presidential transition plan being organized by the Heritage Foundation — Project 2025 — would also prevent the Fed from issuing a CBDC. "Central bank digital currency is a tool that will inherently be used for coercion and control, so we should destroy it,†Rep. Warren Davidson (R-Ohio) told our Eleanor Mueller. “We should never let it be built.†House Financial Services will vote today on legislation that would prohibit the Fed from issuing a CBDC without congressional approval. The bill would also block the Fed from issuing digital currencies directly to individuals and prohibit it from using CBDC in monetary policy. (There are multiple ways that a CBDC could be designed, including as a consumer instrument or as a means of transacting between banks.) Democrats are split on the issue. Rep. Jake Auchincloss (D-Mass.) introduced the bipartisan proposal to require the Fed to get congressional approval to launch a CBDC. It has two Democrats as co-sponsors. “Our hearing last week showed that even some Democrats agree that the Federal Reserve can’t issue a CBDC without Congress,†Rep. French Hill (R-Ark.), the chair of the digital assets subcommittee, told MM. “We’re going to have a vigorous debate today about the legislation but this view isn’t controversial or partisan.†Other Democrats have taken a different tack. Rep. Stephen Lynch (D-Mass.) just launched a caucus to educate members on a U.S. digital dollar and introduced a bill that would require the Treasury Department to launch a pilot program. “I worry about some of the recent false narratives and fear mongering, much of which has been fueled by the crypto industry itself,†Lynch said at a hearing last week. “It's important to correct some of the inaccurate and misleading claims that could lead us to shut down innovative policy approaches, before we have even begun a meaningful discussion.†Happy Fed Day — We’d love to hear your FOMC reaction: Zach Warmbrodt, Sam Sutton.
|