The ongoing tussle over the potential introduction of a central bank digital currency (CBDC) by the Federal Reserve heats up in the U.S. House Financial Services Committee. Maxine Waters, (D-CA). a key figure in the group of lawmakers wrangling over cryptocurrency policy, has taken aim at a bill recently reintroduced by Rep. Tom Emmer (R-MN) designed to forbid the Federal Reserve System from issuing a CBDC.
Waters, who previously chaired the Committee, expressed her reservations over the partisan nature of the bill, which she suggested will stifle innovation and keep the United States trailing behind other countries. She lamented:
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“Unfortunately, Republicans are marking up one bill that is not bipartisan. It will keep the United States behind other countries, including China, as they race forward to develop a global standard for central bank digital currencies… At this point, nobody fully understands the potential benefits and challenges of CBDCs, or how their implementation could affect the preeminence of the U.S dollar and global finance more broadly. That is why the Biden Administration and the Federal Reserve are researching this.”
However, she criticized the Republican bill, stating that it could hinder research efforts, potentially weakening the U.S.’ ability to maintain pace with innovations in financial technology. She said to the Committee:
“The Republican bill before us today would stifle that research and prevent us from moving forward even if it means that the dollar loses its status as the world’s reserve currency and even if it means that U.S. citizens lose out on faster, cheaper, and simpler payments.”
The congresswoman closed her remarks on the subject by saying: “I am disappointed that Republicans have taken such a deeply anti-innovation stance.”
Waters has been instrumental in calling for an acceleration of the Federal Reserve’s efforts to establish a digital dollar, viewing it as a race that the U.S. could potentially lose to other nations, particularly China. While the debate continues, the overarching concern remains: the potential for the U.S to lag behind in setting the standards for such a significant financial innovation.
The CBDC Anti-Surveillance State Act, reintroduced last week by Rep. Tom Emmer, would prohibit the Federal Reserve from issuing a CBDC directly to individuals or from indirectly issuing a CBDC to individuals through an intermediary. The bill also prohibits the Fed from using any CBDC to implement monetary policy.
Waters noted the committee meeting, despite some disagreements, was on the whole very productive, indicating that working relationships among lawmakers are still functional. Specifically, Waters took pride in the Committee’s work towards reaching a consensus on bills related to U.S. banks’ de-risking practices in the Caribbean and other regions, compliance with sanctions related to Russia and Belarus, and imposing sanctions on foreign firms that facilitate spyware targeting U.S. national security personnel.
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