Committee Republicans Release Central Bank Digital Currency Principles
Principles Outline How Potential CBDC Proposals Should Be Evaluated
Washington,
November 15, 2021 -
Today, Republicans on the House Financial Services Committee, led by Ranking Member Patrick McHenry (NC-10), released principles to guide Congress’ evaluation of potential proposals for a U.S. Central Bank Digital Currency (CBDC). The principles state that a potential Fed-issued digital currency must maintain the dollar as the world’s reserve currency and the preeminence of the U.S. payment system; not impede ongoing development of stablecoins; promote private sector innovation and foster competition; and address privacy and security protections.
These principles were developed by Committee Republicans’ Digital Asset Working Group Members Republican Leader Patrick McHenry (NC-10), Rep. Ann Wagner (MO-02), Rep. Blaine Luetkemeyer (MO-03), Rep. Bill Huizenga (MI-02), Rep. Andy Barr (KY-06), Rep. French Hill (AR-02), Rep. Tom Emmer (MN-06), Rep. Warren Davidson (OH-08), Rep. Ted Budd (NC-13), and Rep. Anthony Gonzalez (OH-16).
“This is a pivotal moment in the conversation around the growing role of financial technology in our everyday lives,” said the Working Group Members. “As we consider how issuing a U.S. Central Bank Digital Currency may fit into this 21st century landscape, it is critical that lawmakers fully understand both the potential costs and benefits. That is why Financial Services Committee Republicans have crafted principles to ensure the discussion is focused on whether a Fed-issued digital currency addresses a problem, rather than creating one. First and foremost, the U.S. dollar and payment system must remain the best in the world. To accomplish this goal, we must not stifle private sector innovation and competition. The ball is in Congress’ court—as the Federal Reserve cannot issue a digital currency without Congressional authority—and Republicans will continue to fully assess how a Fed-issued digital currency could impact our nation’s competitiveness and our financial system.”
Financial Services Committee Republicans’ CBDC Principles:
Address Inefficiencies in the U.S. Payment System
- Any consideration of a central bank digital currency should be done with the dual goal of maintaining 1) the U.S. dollar as the world’s reserve currency and 2) the global preeminence of the U.S. payment system, including how a digital currency might remove inefficiencies in both U.S. and cross-border payments.
Stablecoins
- Stablecoins hold promise as a potential cornerstone of a modern payment system, if issued under a clear regulatory framework.
- If Congress contemplates authorizing the use of a Fed-issued digital currency, it should not impede the development and utilization of stablecoins, both those currently in circulation and those yet to be developed.
Private Sector Must Lead the Way
- Digital currency policies must promote private sector innovation and foster competition to ensure the United States maintains the world’s leading payment system. Congress and regulators should recognize the unique nature of these innovations and establish a regulatory framework that targets the activity and not the technology.
- Overly burdensome policies will diminish the potential gains to our financial system and put the U.S. at a disadvantage among our international competitors and allies alike.
Ensure Privacy and Security
- The Federal Reserve cannot issue a digital currency without Congressional authority. If Congress contemplates authorizing the use of a Fed-issued digital currency, privacy and civil liberties protections must be evaluated in a manner consistent with currency transactions utilized today, and security protections must be addressed.
###
