A bill was introduced in the U.S. Senate that would prohibit the ability of Federal Reserve banks to issue central bank digital currency (CBDC).
The No Central Bank Digital Currency Act (S.4831), introduced by U.S. Sen. Mike Lee (R-UT), would amend the Federal Reserve Act to block the Federal Reserve or any agency of the federal government from minting or issuing a CBDC, whether through a direct to consumer or intermediated model.
“No Federal reserve bank may hold digital currencies minted or issued by the United States Government as assets or liabilities on their balance sheets or use such digital currencies as part of fulfilling the requirements under section 2A,’’ the bill reads.
Currently, the Federal Reserve is in the process of researching and developing its own CBDC. The Utah senator said the constitution does not permit the central bank to operate independent of congressional authority, and Congress has not authorized the creation of a CBDC.
Also, Lee contends that it would reshape the U.S. financial sector.
“An American CBDC would offer U.S. citizens nothing that they cannot already obtain through private financial innovation. Instead, it could make their every transaction known to the Federal Reserve, while converting banks and credit unions into merely wallets rather than private lending institutions,” Lee stated.
The bill is co-sponsored by Sen. Mike Braun (R-IN). It has been referred to the Senate Banking, Housing, and Urban Affairs Committee.