WASHINGTON—Credit unions strongly oppose the Federal Reserve’s debit interchange proposal, America’s Credit Unions has told the House Financial Services Committee.
The position was outlined in a letter sent by the association ahead of Fed Chair Jerome Powell’s testimony.
“Any Board action should be based on robust, thorough, and accurate data that reflects market realities for all covered issuers,” wrote ACU President and CEO Jim Nussle. “The Board’s proposal is based on data from 2021 that does not account for the far-reaching changes to Reg II requiring dual routing for card-not-present transactions that went into effect on July 1, 2023. This change has direct bearing on the data used to calculate the proposed interchange fee cap including the aforementioned ACS costs that are central to the justification for drastically reducing the cap.”
Nussle added the impact of the new routing requirements is undetermined and must be quantified before proceeding with any additional rulemaking.
Opposition to CBDC
In addition, America’s Credit Unions said it opposed to the creation of a central bank digital currency (CBDC), which would represent a fundamental transformation of banking and payments and poses “serious risks” to consumers and the financial system, Nussle said.
“The creation of a CBDC deserves serious and exacting consideration that includes a focused enunciation of the issues Congress and the Federal Reserve would intend to solve through a CBDC that are singular and unique to the digital currency, novel and not duplicative of current innovations in the marketplace, and that do not worsen the provision of financial services for consumers or credit unions,” Nussle wrote.
Considerations Recommended
According to America’s Credit Unions, any consideration of a CBDC must proceed with several cornerstone principles, including:
- Implementation of a CBDC should not proceed without congressional authorization and a clear structure and novel purpose
- Any CBDC must utilize an intermediated model that preserves the direct relationship between consumers and financial institutions
- Deposit substitution and its cascading effects must be sufficiently mitigated
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