During the hearing, Republicans were quite aggressively asked about the situation and requirements of legislation for CBDCs, the so-called Digital Dollar
On 26th May, the United States Financial Services House Committee held a hearing focused on the potential digital dollar, the aspiring Central Banks Digital Currency of the country. During the hearing, some Republicans tried to puzzle Federal Reserve Vice Chairperson, Lael Brainard over the requirement of legislation for CBDC. However, Brainard referred to the paper issued by the Fed in January explaining working on CBDC.
The Paper that Brainard referred to stated that the Federal Reserves has no intentions to proceed further with CBDC’s issuance without having clear support from the executive branch and the Congress, which is ideal in terms of a specific authorizing law. Although using the terms like ‘intentions’ and ‘ideally’ in the statement made Republicans skeptical.
Committee’s Ranking Republican, Patrick McHenry said that it seems like there are still some shaky movements regarding the decision that the Fed is trying to show. McHenry emphasized that the Federal Reserves is limited by resolutions. Over this, Brainard responded that the Federal Reserve is prohibited from offering individual accounts. While Representative Luetkemeyer thinks that the terms ‘ideally’ is putting limitations and tries to clarify what are the requirements in the legislation’s absence.
Governor Brainard however postponed it to the Department of Justice. Congressman Loudermilk raised the concerts asking if the Fed would anyhow confirm that it would not move further without any authorization of legislation, but he did not receive a definitive response.
Other than this, Governor Brainard also highlighted that there are possibilities for the launch of initiatives to get slowed down due to democratic debates. So she proposed the need to have an unregt discussion. She said that a debate could even take five long years and the implementation would take additional five years.
Brainard said this while responding to Representative Pressly’s question who asked if the Federal Reserve was being slow on faster payments methods. It explained that the United Kingdom already had its platform way back in 2007 while FedNow is launching now in 2023 at the earliest.
Fed Vice chair said that FedNow did not initiate for quite a long time in the past because of the public debate nature that the country has at present. The process of FedNow started in 2015 itself and a decision was made in 2019. She further explained that the private sector has a lot of excitement about FedNow at this point, however, the uncertainties have also come along with it.