McHenry Statement on Fed CBDC Discussion Paper
Washington,
January 20, 2022 -
Today, the top Republican on the House Financial Services Committee, Patrick McHenry (NC-10), issued the following statement after the Federal Reserve released its Central Bank Digital Currency (CBDC)
discussion paper:
“In order for the U.S. payments system to remain the best in the world, private sector innovation must lead the way," said Republican Leader McHenry. "This is top-of-mind as Congress evaluates the implications of pursuing a U.S. central bank digital currency. The Federal Reserve’s white paper is an important first step in an on-going process to consider both the potential costs and benefits of issuing a U.S. CBDC.
"Despite calls for the Fed to accelerate its progress, I share Chair Powell’s view. It’s more important we get this right than to be first. This means policymakers must closely examine the impact a CBDC will have on private sector competition and innovation, while addressing privacy, civil liberties, and security concerns. I am pleased the report reaffirms the Fed will not move forward on a CBDC without express authority from Congress. I look forward to working with my colleagues to ensure our financial system, including the role of the Fed, continues to support our economic and global competitiveness.”
Last November, Republicans on the House Financial Services Committee, led by Ranking Member McHenry, released
principles to guide Congress’ evaluation of potential proposals for a U.S. 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.
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.
###
