House passes bill barring Federal Reserve from issuing digital dollar

The House of Representatives on Thursday passed a bill that would prohibit the Federal Reserve from issuing a central bank digital currency (CBDC) without explicit permission from Congress.

The state CBDC surveillance bill passed the Assembly in a vote of 216-192, almost entirely along partisan lines.

The move is largely symbolic, as the Fed has not submitted plans to issue a CBDC and has repeatedly stressed that it will not proceed without Congressional approval.

Still, Republicans, including former President Donald Trump, have expressed concerns about the potential for government misuse of a CBDC.

A CBDC is a digital version of a currency issued by a central bank. In the United States, the Federal Reserve would issue a digital dollar that could be used just like a regular dollar.

House Majority Whip Tom Emmer (R-Minn.), who introduced the bill, argues that a digital dollar “could potentially give the federal government the power to monitor Americans’ transactions and block politically unpopular activity.”

Emmer’s views on the issue are largely in line with those of President Donald Trump, who has vowed to block the creation of a CBDC if re-elected.

“As president, I would never authorize the creation of a central bank digital currency,” Trump, the presumptive Republican nominee, said at a rally in New Hampshire in January.

“Such a currency would give the federal government, our federal government, absolute control over the people’s money,” he added at the time. “They could take people’s money. People wouldn’t even know it was gone. This would be a dangerous threat to liberty.”

However, Rep. Maxine Waters (D-Calif.), ranking member of the House Financial Services Committee, argued on the House floor on Thursday that banning CBDCs “would directly threaten the primacy of the U.S. dollar.”

“There is nothing inherently privacy-infringing about a CBDC — that is a design feature we can control,” she added. “Rather, this bill is an attempt to stifle American innovation and competitiveness abroad and weaken the federal agency most important for fighting inflation.”