WASHINGTON–New legislation in Congress seeks to block the Federal Reserve from issuing a central bank digital currency directly to consumers.
The legislation comes as there has been strong interest by central banks internationally in digital currencies, as CUToday.info has extensively reported, and as the Federal Reserve continues its own study of issuing a digital currency.
The bill was introduced by Rep. Tom Emmer (R-MN).
"Requiring users to open up an account at the Fed to access a (U.S. central bank digital currency (CBDC)) would put the Fed on an insidious path akin to China's digital authoritarianism," Emmer said in a statement. "It is important to note that the Fed does not, and should not, have the authority to offer retail bank accounts."
A CBDC, Emmer said, would require the centralization of information, which would leave Americans vulnerable to attacks and subject them to constant surveillance. Instead, he said the central bank should protect financial privacy, maintain the US dollar's dominance, and cultivate innovation.
"CBDCs that fail to adhere to these three basic principles could enable an entity like the Federal Reserve to mobilize itself into a retail bank, collect personally identifiable information on users, and track their transactions indefinitely," he said in his statement.
Definitions & Data
A CBDC is a type of central bank liability — similar to the US dollar — issued in digital form, which could be used by the general public. It has the full backing of the central bank but could be managed by designated private financial institutions.
Emmer has been a long-time advocate of cryptocurrency and has introduced several crypto-related bills.
The Federal Reserve has not announced any plans to issue such a digital currency and has only said to date that it is studying the issue.
According to at least one analysis, there are currently 87 countries exploring their own CBDCs, and 14, including major economies like China and South Korea, are already in the pilot stage. Nine have already fully launched them.