May 29, 2024
Digital Dollar Pilot Prevention Act Progresses in US Congress
Policy & Regulation

Digital Dollar Pilot Prevention Act Progresses in US Congress

The House Financial Services Committee of the United States is advancing legislation that would forbid the creation of a central bank digital currency.

On September 20, the committee will mark up two proposals pertaining to a future digital dollar, according to a statement from chairman Patrick McHenry. In markups, legislators talk about the specifics of a measure. Before legislation is brought to the House floor, this is an essential stage.

The Digital Dollar Pilot Prevention Act, or H.R. 3712, is one of the pieces of legislation that forbids the Federal Reserve from starting pilot projects to test CBDCs without congressional approval. Representative Alex Mooney first proposed the bill in May.

In a recent statement, the Fed denied having made any decision about the issuing of a CBDC, saying that it “would only proceed with the issue of a CBDC with an authorizing law.” But over the past two months, the Federal Reserve of San Francisco has looked at filling technical positions for a CBDC project, suggesting that the digital dollar is still on the table.

The second piece of legislation is an amendment to the Federal Reserve Act that forbids Fed banks from directly marketing certain goods and services to consumers and outlaws the use of CBDCs for monetary policy and other purposes.

“A Federal Reserve bank shall not offer a central bank digital currency, or any digital asset that is substantially similar under any other name or label, indirectly to an individual through a financial institution or other intermediary,” the bill states.

In the US, there is debate regarding the possibility of a digital dollar. Ron DeSantis and Robert F. Kennedy Jr., both candidates for president, have opposed the creation of a CBDC in the nation due to worries about financial privacy. CBDC proponents assert that the usage of cryptocurrencies will increase while the dollar’s global relevance will be preserved.

Image: Freepik

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