Members of the House asked for clarification about whether the Fed might be looking at an “intermediated model” to create a digital currency that would require congressional authorization.
The House Committee on Financial Services has asked Lael Brainard, the Vice Chair of Federal Reserve, to clarify her position on central bank digital currencies ahead of the deadlines set forth by President Joe Biden’s executive orders on digital assets.
23 Republican legislators, including Patrick McHenry , wrote to Brainard on Wednesday asking whether the Fed vice chair sought to answer whether the central bank wanted to “curtail use of digital assets” and other innovative payment methods from the private sector by issuing a digital currency. They also wanted to know what Congress might do in supporting a U.S. central banking digital currency, or CBDC.
Benefits and dangers of a digital currency have been discussed
Brainard spoke to the committee in May about the benefits and dangers of a digital currency. He suggested that placing limitations on CBDC holdings, and not offering interest on accounts with digital dollars could help maintain the role of credit cooperatives while maintaining some aspects of traditional banking.
Members of the Republican House asked for clarification about whether the Fed is considering an “intermediated” model for a digital currency that would require Congress’ direct authorization to be established. They also wanted to know what role the White House might play.
“Please describe the meaning of strong support from the executive branch.” Does it come in the form of an Executive Order or a letter?
Both regulators and lawmakers on both sides have expressed concern about the Fed’s introduction of a CBDC. Jerome Powell, the Fed chair, previously stated that there was no hurry for the U.S.A to issue a digital currency despite other countries such as China doing so.
Jim Himes, a Connecticut Representative, also published a whitepaper in June proposing that Congress “begin to consider and eventually pass authorizing legislation for issuance of a U.S. CBDC.”
