WASHINGTON—The credit union trade groups have sent letters to Capitol Hill related to legislation on central bank digital currencies and CFPB rules, respectively.
In response to legislation that would prohibit the Federal Reserve from exploring the creation of a central bank digital currency (CBDC) through a pilot program, which was introduced by Rep. Alex Mooney (R-WV), NAFCU has expressed support for the bill, saying the benefits of a CDBC are “difficult to identify.”
The Digital Dollar Pilot Prevention Act would prevent the Fed from establishing, carrying out, or approving a program intended to test the practicability of issuing a CBDC. NAFCU Vice President of Legislative Affairs Brad Thaler has sent a letter in support following its introduction.
‘Costly Trade-Offs’
“NAFCU is concerned that the costly tradeoffs are very likely to exceed hypothesized benefits of a CBDC which are, to this point, difficult to identify,” Thaler wrote. “Additionally, the administration of a CBDC will distract from the Federal Reserve’s dual mandate of achieving both stable prices and maximum sustainable employment. The Federal Reserve should instead focus on the existing financial sector infrastructure, encourage responsible innovation, ensure a level playing field for all, and apply consumer financial protection law consistently.”
Earlier this year, Rep. Tom Emmer (R-MN) introduced the CBDC Anti-Surveillance State Act to prohibit the Fed from issuing a CBDC and using it to implement monetary policy to ease privacy concerns and protect the stability of the financial system.
CUNA Calls for Exemption from CFPB Rules
Separately, CUNA has written the House Financial Services Subcommittee on Financial Institutions and Monetary Policy in response to two pieces of draft legislation discussed at its hearing this week on treasury markets and financial institutions, stressing credit unions must be exempt from most CFPB rules.
CUNA said it welcomes legislation from Subcommittee Chairman Andy Barr (R-KY) that would raise the threshold for mandatory Consumer Financial Protection Bureau (CFPB) supervision to $50 billion (up from the current $10 billion).
‘Should be Exempt’
“CUNA and the credit union movement have maintained that credit unions should be exempt from most of the regulations and CFPB supervision of the Dodd-Frank Act, enacted thirteen years ago,” the letter reads. “Credit unions, no matter their size, are not-for-profit financial cooperatives with a mission statement of serving their members, not outside stockholders. In fact, credit unions are governed by boards of directors that are derived from their membership, where each member has one vote, regardless of the size of their deposits or the length of their membership.
“In addition, CUNA has always urged the CFPB to exempt all credit unions from its supervision by exercising its exemption authority in Section 1022 of Title X of the Dodd-Frank Act,” the letter adds. “This section permits, but does not require, the Bureau to exempt any class of covered person from any provision of Title X or any rule issued by the Bureau under Title X if such an exemption is consistent with relevant statutory considerations that the Bureau must take into account in issuing an exemption.”
Additional Request
CUNA also called on for credit unions to be included in draft legislation that would allow banks—for one year—to pay Deposit Insurance Fund assessments with U.S. Treasury securities.
“We respectfully urge the Subcommittee to extend parity in this legislation as well, giving credit unions the option of paying any NCUSIF deposit insurance assessments with U.S. Treasury securities,” the letter reads. “In addition, we ask the Subcommittee to consider making this authority permanent. This would give financial institutions the flexibility they need to serve their members and customers. It would also provide an additional tool to enhance long-term capital and liquidity management planning.”
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