S.464 - No Central Bank Digital Currency Act; No CBDC Act (119th Congress)
Summary
The "No Central Bank Digital Currency Act" (S.464) aims to amend the Federal Reserve Act to restrict the ability of Federal Reserve banks to issue a central bank digital currency (CBDC). Specifically, it prohibits Federal Reserve banks from issuing CBDCs directly to individuals or maintaining accounts on their behalf. The bill also prevents Federal Reserve banks from holding digital currencies issued by the U.S. government as assets or liabilities.
Expected Effects
If enacted, this bill would prevent the Federal Reserve from developing and distributing a CBDC in the manner described. This could limit the government's options in responding to the evolving digital financial landscape. It would also preserve the current structure of monetary policy implementation.
Potential Benefits
- Protects individual financial privacy by preventing direct government access to citizens' digital currency accounts.
- Preserves the existing banking system by limiting the Federal Reserve's ability to compete directly with commercial banks.
- Reduces the potential for government control over the economy through a centralized digital currency system.
- Mitigates risks associated with cybersecurity and potential misuse of a CBDC.
- Reinforces the role of private sector innovation in the digital currency space.
Most Benefited Areas:
Potential Disadvantages
- Limits the potential for innovation in payment systems and financial technology.
- Hinders the government's ability to respond to the growing adoption of digital currencies globally.
- Reduces the potential for increased financial inclusion through a CBDC.
- May put the U.S. at a disadvantage compared to other countries that are exploring or implementing CBDCs.
- Could limit the effectiveness of monetary policy in the future.
Constitutional Alignment
The bill's alignment with the Constitution is complex. Congress has the power to coin money and regulate its value (Article I, Section 8). This bill seeks to limit how that power is exercised in the digital age. Arguments can be made that restricting the Federal Reserve's ability to issue a CBDC protects individual liberties and prevents potential government overreach, aligning with the spirit of the Bill of Rights. However, others might argue that it infringes upon Congress's enumerated powers to manage the nation's currency effectively.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).