House Passes Act to Prohibit Federal Banks from Offering CBDCs to Individuals
Commentary by Steven Lofchie
The U.S. House of Representatives passed the "CBDC Anti-Surveillance State Act." The bill would prohibit "Federal Reserve banks from offering certain products or services directly to an individual" and "the use of central bank digital currency for monetary policy."
The bill, passed by partisan vote, requires authorizing legislation from Congress for the issuance of any CBDC. Prohibited products and services would include the maintenance by the Federal Reserve banks of accounts for individuals and the availability of a CBDC for use by individuals.
In a Financial Services Committee press release, Chair Patrick McHenry (NC-10) said that the bill "halts unelected bureaucrats from issuing a central bank digital currency, or CBDC, that would be detrimental to Americans' right to financial privacy." Chair McHenry equated CBDC to a "surveillance tool," citing to examples of other governments using it to "weaponiz[e] their financial system." Chair McHenry asserted that the Chinese government uses CBDC "to track spending habits of its citizens." He said this "type of financial surveillance has no place in the United States."
Commentary
Whether the U.S. government should issue a CBDC, and, if so, the privacy protections that should be associated with it, is an extraordinarily significant question—one that should be decided by legislators, not regulators. Legislators who purport to worry about the unreasonable exercise of executive powers should be particularly concerned about voting to grant such authority to the executive branch on a question of this magnitude.
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