April 18, 2023 2 min read
Senate bill seeks to limit Fed authority on digital currency
By Paul Gilkes , Coin World, Published: Apr 18, 2023, 8 AM
Legislation reintroduced in the U.S. Senate seeks “to amend the Federal Reserve Act to limit the ability of Federal Reserve banks to issue central bank digital currency.”
S. 967 was introduced March 23 by Sen. Mike Lee, R-Utah.
“The United States doesn’t need to create a Central Bank Digital Currency to know it is a bad idea,” Lee says. “We’ve seen this play out in China with the digital Yuan. In early trials, China canceled its citizens’ money after a set period, forcing Chinese citizens to spend their savings at the compulsion of the government.
“My bill protects Americans from a similar intrusion by prohibiting the Federal Reserve or any federal government agency from minting or issuing a CBDC, whether through a direct-to-consumer or intermediated model.”
Lee says the Federal Reserve has already begun to develop “a central bank digital currency (CBDC), a digital asset, minted, issued, and controlled by them, that would alter the ability of financial institutions to function as lenders, while giving the federal government knowledge of every purchase that uses a CBDC.
“Financial institutions could no longer offer loans — or at the very least would be significantly restricted in doing so — since they would bear no risk for a deposit; they would function merely as wallets, holders of a CBDC — and as such, could not extend deposits to prospective borrowers in the form of loans. Lastly, the Federal Reserve would have knowledge of every transaction involving a CBDC; if it maintains the technology to create and operate a CBDC, it will know how it is used.”
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