Democrats Call for Global Leadership in Central Bank Digital Currencies, Republicans Fear Potential ‘Dark Side’

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On Sept. 20, the House Financial Services Committee held a markup of the CBDC Anti-Surveillance State Act. Discussions moved beyond the financial and technical, with Star Wars, anarchists, and crypto bros being mentioned. However, beneath the rhetoric, the value of research, U.S. citizens’ privacy and the role of government in everyday life were discussed.

Tom Emmer introduced the bill, characterizing it as “simple” and saying it would halt the efforts of Biden’s administration from issuing a financial surveillance tool. Furthermore, he mentioned the Chinese digital yuan, government social credit system, and Canada’s freezing of bank accounts during the truckers’ protest of 2022. The bill has the support of 60 senators and numerous organizations, according to Emmer.

Maxine Waters, Ranking Member, renamed the bill The CBDC Anti-Innovation Act and claimed it would threaten the status of the dollar as the principal global reserve currency. She also said the bill would give China the reins to set the global standard for central bank digital currencies.

Stephen Lynch pointed out some inconsistent language in the bill, and there were questions about the research on CBDC allowed by the bill. Brad Sherman compared cryptocurrency unfavorably to CBDCs, saying no one has to use digital currency. Mike Flood suggested the government committee members to “picture a politician they dislike the most” and imagine them with the power of a retail CBDC.

The committee eventually agreed that the bill prevents the issuance of a CBDC without an act of Congress. Maxine Waters and Stephen Lynch introduced amendments to authorize the Fed to study the Chinese digital yuan, which could facilitate efforts to evade U.S. sanctions. After four hours, the committee passed the bill, recommending it to the full House on a vote of 27 to 20.

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