WASHINGTON—The creation of a central bank digital currency (CBDC) raises privacy concerns, America’s Credit Unions told the House. Separately, the trade group also expressed opposition to any amendments to the National Defense Authorization Act (NDAA).
The opposition to any CBDC was expressed in a letter from ACU President/CEO Jim Nussle, who wrote in support of the CBDC Anti-Surveillance State Act (H.R. 5403) in advance of House floor consideration of the bill this week. The bill prohibits the Federal Reserve from issuing a CBDC.
“While a central bank digital currency (CBDC) might sound like it would be of massive benefit to consumers, it brings with it privacy concerns and many of the design features necessary to achieve certain benefits come with serious tradeoffs that could negatively impact credit unions and pose broader financial stability risks,” Nussle wrote to House members. “In some cases, those tradeoffs are difficult to anticipate because underlying regulatory policies—such as what balance to strike in terms of protecting consumer privacy, or how to guard against retail deposit substitution—are not yet developed.”
‘Massive Expansion’
Nussle further argued the “massive expansion” of the Fed mission that would come alongside offering a CBDC directly to consumers would threaten to erode the financial system, and “administration of a CBDC will distract from the Federal Reserve’s dual mandate of achieving both stable prices and maximum sustainable employment.”
House Majority Whip Tom Emmer (R-MN) introduced the bill in April, and Sen. Tim Scott (R-SC) has introduced a Senate version.
Objections to NDAA Amendments
Separately, House Armed Services Committee leaders were told that America’s Credit Unions oppose any amendments to the FY2025 National Defense Authorization Act (NDAA) from the banking lobby on Department of Defense (DoD) land leases.
The committee is expected to mark up its version of the FY25 NDAA this week.
“We thank the Committee for recognizing these important distinctions whether it is a large commercial bank or a small community bank,” Nussle wrote. “More importantly, with multiple global contingencies and force structure considerations, Congress and DoD have more pressing issues to consider. Thus, we oppose the bank lobby using this critical, must-pass defense bill as a shortcut to increase their profit margins.”
Nussle noted that a DoD report requested in the 2022 NDAA “found zero instances where the current lease structure is 1) harming financial access to service members and their families, and 2) causing any base to go without financial services on the installation…Thus, DoD sees no need to change the status quo which should settle this issue so the committee can rightly move on to more urgent national security concerns.”
‘In-Kind Consideration’
The DoD’s report also outlines the “in-kind consideration” process that for-profit banks could use to decrease expenses under the Military Leasing Act, ACU noted.
“Furthermore, we see no need to consume the committee’s time in developing a legislative formula to impose on installation commanders who are busy enough preparing for combat operations,” Nussle added. “We are concerned that this effort by ‘for-profit’ banks would amount to Congressional micromanagement of individual base commanders to solve a problem that the DoD has confirmed does not exist.”
NCUA June Board Meeting Cancelled
NCUA said it is canelling its June board meeting due to the absence of Chairman Todd Harper, who is undergonig back surgery. The May 22 meeting was held without Harper, with Vice Chairman Kyle Hauptman and Board Member Tonya Otsuka present.
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