House Republicans Seek Answers from Lael Brainard
In a significant move, 24 Republican members of the House Committee on Financial Services have reached out to Lael Brainard, the Vice Chair of the Federal Reserve, insisting she clarify her stance on the concept of a central bank digital currency (CBDC). Their letter surfaces ahead of the deadlines set by President Biden’s executive order regarding digital assets. Talk about being fashionably early—or is it late?
The Questions at Hand
The lawmakers are not just casually asking about the CBDC’s status; they’re probing whether the Fed intends to limit the use of digital assets and stifle innovative payment methods in the private sector. They’ve also thrown in the million-dollar question: what role Congress might play in facilitating a U.S. CBDC. Because let’s face it, what’s a good government policy without a bit of legislative drama?
Context From Previous Hearings
Back in May, Brainard presented to the committee discussing the pros and cons of a digital dollar. During her testimony, she hinted that imposing limits on CBDC holdings and refraining from offering interest on digital dollar accounts could help keep the best practices of credit unions intact. Who knew that digital currency could be such a hot topic? If only we could earn interest on our hopes and dreams!
Open Questions about the Digital Dollar
The committee Republicans have asked Brainard to clarify if the Fed is contemplating an “intermediated model” for the digital dollar, which might require Congressional approval. Which begs the question: how much red tape do we really want in the future of money? Furthermore, they want to know what “strong support” from the executive branch looks like. Is it a supportive letter? An Executive Order? A heart emoji?
Bipartisan Concern Over CBDC
Interestingly, both Republicans and Democrats share some unease regarding the Fed introducing a CBDC. In a world where digital currencies are popping up like weeds in a garden, Fed Chair Jerome Powell noted that there’s no immediate urgency for the U.S. to unveil a digital dollar, unlike our competition in countries like China. Meanwhile, Representative Jim Himes from Connecticut offered a white paper in June helping Congress take the initial steps to consider authorizing the issuance of a U.S. CBDC. Because nothing says progress like dragging Congress into the digital age, right?
