House Republicans move to prohibit central bank digital currency

2HY1X2D Sacramento, USA. 14th Mar, 2022. Assemblyman Kevin Kiley speaks on AB 1638 during a press conference at a Shell gas station in Sacramento, Calif. on Monday, March 14, 2022. The bill would suspend the gas tax for six months. (Photo by Rahul Lal/Sipa USA) Credit: Sipa USA/Alamy Live News

Photo: Alamy

House Republicans are taking steps to prevent the Federal Reserve from introducing a central bank digital currency.

Rep. Kevin Kiley, R-Calif., announced Thursday that he is co-sponsoring H.R. 122 to “forbid” the Federal Reserve from “issuing” Central Bank Digital Currency.

According to the legislation, the H.R. 1122 bill would, “amend the Federal Reserve Act to prohibit the Federal reserve banks from offering certain products or services directly to an individual, to prohibit the use of central bank digital currency for monetary policy, and for other purposes.”

The legislation comes in the wake of reports that the Federal Reserve will begin a digital payment system this summer.

The “FedNow” program has been described as “a leading-edge payments system that is resilient, adaptive, and accessible.” However, Republicans in both the House and the Senate have pushed back against the Federal Reserve’s plans and warned against the transition to any form of centralized digital currency.

The bill, currently co-sponsored by Kiley, states, “Except as specifically authorized under this Act, a Federal reserve bank may not offer products or services directly to an individual, maintain an account on behalf of an individual, or issue a central bank digital currency directly to an individual.”

The House legislation would also prevent the Federal Reserve System and the Federal Open Market Committee from using central bank digital currency to “implement monetary policy.”

While Kiley is co-sponsoring efforts to prevent digital currency in the House of Representatives, Sen. Ted Cruz, R-Texas, recently introduced legislation in the U.S. Senate that would also prevent the federal government from establishing a form of central bank currency.

“The federal government has no authority to unilaterally establish a central bank currency,” Cruz said. “The bill goes a long way in making sure big government doesn’t attempt to centralize or control cryptocurrency and instead, allows it to thrive in the United States.”

Cruz said that the government should be “empowering” entrepreneurs in the United States and should be working to increase freedom, rather than prevent freedom by establishing a centralized currency.

President Donald Trump has also repeatedly warned of attempts by other nations, most notably China, to devalue the U.S. dollar. In a post on Truth Social Wednesday, Trump wrote, “China is trying to displace the U.S. Dollar as the NUMBER ONE CURRENCY throughout the World. Unthinkable three years ago! If this happens, and under Biden’s leadership it probably will, this would be the biggest defeat for our Country in its history. We will be reduced to SECOND TIER STATUS.”

As RSBN previously reported, countries such as China, Russia, India, and Brazil have announced that they will no longer trade in U.S. currency. With multiple countries pursuing a common currency known as BRICS, the U.S. dollar could be at risk of losing its dominance.

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