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Several House bills are racing to head off a CBDC in the U.S., though a key Democrat wrote one that would set up a CBDC pilot.
A Thursday hearing is set to hash out the implications of a government token, though there's little headway in the Biden administration toward actually suggesting one.
The idea of a digital dollar in the U.S. is so egregious to Republican lawmakers that it’s become a presidential campaign talking point and the subject of multiple bills to strangle it before it takes a first breath. But Rep. Stephen Lynch (D-Mass.) reintroduced a bill Thursday calling for the exact thing they’re trying to stop.
His pitch to take the first steps toward a central bank digital currency (CBDC) comes the same day the House Financial Services Committee’s panel on digital assets is set to examine the notion of a digital dollar. Lynch is the crypto subcommittee’s top Democrat. But the hearing agenda is linked to a series of Republican bills that would ban CBDCs – including one that would prevent the government from being able to even run a pilot program to see how the government-backed token would work.
“As digital payment and currency technologies continue to rapidly expand and with Russia, China, and nearly 130 countries worldwide already researching and launching some form of Central Bank Digital Currency, it is absolutely critical for the U.S. to remain a world leader in the development and regulation of digital currency,” Lynch said in a Thursday statement about his bill. His legislation would call for a pilot program in the Treasury Department, just as is expressly forbidden by the Digital Dollar Pilot Prevention Act pushed by Rep. Alex Mooney (R-W.V.), another member of the committee.
A U.S. digital dollar would be issued by the Federal Reserve and operate like a purely digital counterpart to the nation’s hard currency, though there are plenty of questions of how transactions would be handled, tracked and even limited by the watchdogs. The idea is in the very early stages of research, Fed Vice Chairman for Supervision Michael Barr said recently, and he vowed that the central bank wouldn’t take a step forward without signoff from the White House and an authorizing bill from Congress – which would need a significant degree of Republican support that’s unlikely to be forthcoming at this stage.
Rep. Tom Emmer (R-Minn.), a staunch crypto ally who is also majority whip in the House leadership, has his own bill – with 50 cosponsors – to stamp out a retail CBDC in the U.S., reintroduced this week.
“If not designed to be open, permissionless, and private – emulating cash – a government-issued CBDC is nothing more than a CCP-style surveillance tool that would be used to undermine the American way of life,” he said in a statement, accusing President Joe Biden’s administration of trying to set up a surveillance state to monitor citizens’ transactions, even in the absence of any actual policy.
Despite Republican talking points that have reached the battlefield of the 2024 presidential contest, the Biden administration hasn’t yet proposed a CBDC in any form. Fed and Treasury Department officials have said they’re looking into the technology, which was rapidly embraced by a handful of nations, including China.
Read More: U.S. Fed’s Vice Chair Barr Says CBDC Decision Still a ‘Long Way’ Off