A growing number of Republican lawmakers are calling to block a central bank digital currency from being issued in the U.S., and Rep. Alex Mooney of West Virginia is the latest to join the chorus.
But Mooney’s bill, which was introduced in the House on Thursday, is different – he’s calling for something called the Digital Dollar Pilot Prevention Act, which aims to prevent the Federal Reserve from launching a pilot program that would test the operability of a central bank digital currency, known as a CBDC, in the U.S. financial system.
The move would stop the development of a CBDC in its tracks, people inside Mooney’s office tell FOX Business.
While anti-CBDC legislation is nothing new, Mooney’s bill attempts to close the pilot program "loophole" that could allow the Federal Reserve to implement a test run of a CBDC without the consent of Congress.
Spokespeople for the Fed, White House and Treasury Departments had no immediate comment on the new legislation. In April, the Federal Reserve said it had not made a decision on issuing a central bank digital currency and would not do so without clear support from Congress. The Office of Science and Technology Policy said in January that it was seeking input regarding R&D initiatives relating to CBDCs.
CBDCs, state-backed digital currencies that are issued and controlled by central banks, have become a polarizing topic in U.S. politics as cryptocurrency and other forms of digital money like stablecoins threaten to shake up the traditional banking system.
Meanwhile, CBDCs are being more widely experimented with internationally. According to international affairs think tank Atlantic Council, as of March 1, 65 countries are in the advanced stage of CBDC development, and more than 20 central banks have launched their pilots, including China, Japan, Russia and Brazil.
Critics of CBDCs are voicing concerns about increased government surveillance and the intrusion of privacy if the Federal Reserve decides to implement a digital dollar. If money becomes completely digital and is issued and controlled solely by the government, then, critics say, a CBDC would give federal officials control over the money flowing in and out of people’s accounts and a window into sensitive financial data.
Proponents of CBDCs say a digital dollar could help boost financial inclusion in the U.S., by eliminating transaction fees that exclude many Americans from existing financial services.
Several GOP lawmakers including House Majority Whip Tom Emmer, R-Minn., Sen. Ted Cruz, R-Texas, Sen. Mike Lee, R-Utah, and Florida Gov. Ron DeSantis –a 2024 Presidential hopeful – have floated legislation that would ban CBDCs in the U.S.
Mooney says that China’s 2020 rollout of its digital yuan pilot program, which was initially designed to serve four cities, has since been expanded to more than 25 cities, with the eventual goal of implementing the digital yuan nationwide.
"Under the guise of a rapidly expanding pilot program, Chinese citizens will soon no longer have the choice of whether or not to use the digital yuan," Mooney said in a statement to FOX Business. "Once it is fully implemented, it would allow Chinese officials to surveil and manipulate the financial activity of not only its citizens but also any foreign individual or firm that does business with China. CBDCs are not about innovation—they are about control."
Mooney’s bill has already received support from 15 fellow House Republicans including Pete Sessions of Texas, and Bill Posey and Byron Donalds, both of Florida, who have all been largely vocal about the need to rein in excessive government oversight and overreach.
Their concern is shared by other GOP lawmakers like Emmer who believes a CBDC could be "weaponized as a surveillance tool" to "choke out politically unpopular activity."
In his presidential campaign launch via Twitter last Wednesday, DeSantis reiterated his opposition to creating a CBDC: "If I’m president, we are not doing a central bank digital currency," he said. "I think that that would be a huge, huge imposition on people’s financial freedoms and financial privacy."
Despite the CBDC issue becoming a largely Republican talking point, it’s becoming clear that CBDCs and cryptocurrency will play a big role in the conversation surrounding the 2024 elections for both Democrat and Republican candidates.
Democratic presidential candidate Robert F. Kennedy Jr. has been particularly vocal about his resistance to a digital dollar, even going so far as to say CBDCs "grease the slippery slope to financial slavery and political tyranny."
Republican candidate Vivek Ramaswamy has echoed these sentiments, saying that a CBDC would make the U.S. more like China, paving the way for a social credit system in America.
Both Kennedy and Ramaswamy have endorsed the $1 trillion crypto industry, another hot 2024 topic, by announcing they will both accept political donations in bitcoin.
